Anthony Albanese fronts crunch China steel talks with iron ore giants
Mining magnate Andrew Forrest warns Australia faces an urgent race, ahead of iron ore giants including Rio Tinto and BHP meeting China’s steel makers in a crunch meeting with Anthony Albanese in Shanghai.
Anthony Albanese and the nation’s biggest miners have made a joint effort to defend the nation’s $100bn iron ore trade with China, with billionaire Andrew Forrest warning that Australia faces an urgent race to fast-track a green metals industry or risk losing market share.
The Prime Minister will put Australia’s iron ore trade with China front and centre during his final day in Shanghai, overseeing a high-level roundtable with Australia’s biggest iron ore producers.
It follows calls in Beijing for the Chinese steel industry to reduce the “huge risk” of its dependence on Australian producers and as trade data suggests the trade could be in decline.
Top executives from Rio Tinto, BHP, Dr Forrest’s Fortescue and Gina Rinehart’s Hancock will discuss steel decarbonisation with the giants of China’s state-owned steel industry Baowu, Ansteel, Hebei Iron and Steel Group, Hunan Iron and Steel Group, Shagang Group and Shougang Group.
Dr Forrest told The Australian there was mutual self-interest in repairing the relationship between the two countries after a period of volatility which saw a sweeping trade ban that ran to $20bn a year.
“There’s not a snowflake’s chance in hell that China won’t send its cities green and its skies blue. They are determined. And that means that its fuel industry has to go green now,” Dr Forrest said.
“Every sovereign must act in their own national interest. And that’s when I became really clearly determined – we’ve got to get a green metal industry off the ground in Australia. We’ve got to break through the cynicism.”
The defence of Australia’s iron ore trade – described as “mission critical” by the government – comes before the Prime Minister flies to Beijing on Monday ahead of pivotal meetings with China’s leader, Xi Jinping, and his top deputy, Premier Li Qiang.
Worth one fifth of Australia’s exports to the world, the stakes of the future of the iron ore trade with China are huge.
“Australia and China’s iron ore and steel sector partnership has contributed to both countries’ economic development for decades,” the Prime Minister will tell the high level roundtable.
“Australian miners are reliable and stable suppliers of iron ore, responsible for almost 60 per cent of China’s iron ore imports. That iron ore goes into Chinese steel production which accounts for over 50 per cent of global supply.
“Steel decarbonisation presents a range of challenges. What we need are enabling policy environments, extensive investments in research to develop new technologies and collaboration across academia, industry and government.”
Dr Forrest said Australia could not take the relationship for granted.
“The Albanese government has worked hard in their last term to repair the relationship, and I think in this term they can consolidate it and really have Australia win from it. But that is time critical.”
While the Australian Prime Minister and some countries’ most senior business figures throw themselves into the defence of the future of the iron ore trade, influential figures in Beijing are warning about China’s continued “high dependence” on Australia for the strategically important resource.
In a briefing paper on the future of Australia-China relations published ahead of Mr Albanese’s visit, a senior Chinese economist said China had to reduce its reliance on Australia by increasing iron ore purchases from rivals Brazil and Africa.
“China’s high dependence on Australian iron ore poses a huge risk to the security of the supply chain,” said Liu Feng, chief economist of the International Institute of Green Finance, Central University of Finance and Economics.
“The risk of supply chain simplification is very prominent. Once geopolitical factors and other factors lead to supply obstruction, the impact on related industries cannot be underestimated; and Australia’s resource exports to China are also vulnerable to geopolitical issues.”
China has been frustrated about its dependence on Australian iron ore and has long spoken of efforts to reduce its dominance, currently 60 per cent of China’s total imports of the resource.
This year, a giant iron ore project in Guinea is West Africa Simandou – dubbed the “Pilbara Killer” – is due to begin production. The project, the largest in Africa, is a partnership between Chinese giant Chalco and Rio Tinto, and has been encouraged by Beijing.
New trade data suggests Australia’s iron ore trade with China may have peaked and now be in gradual decline, as Beijing diversifies suppliers and traditional sources of growth for steel use such the property sector show no signs of returning. In the first five months of the year, Australia’s exports were 16 per cent below where they were when the Prime Minister last visited in 2023, falling from $83.2bn for the period to $69.6bn, according to analysis by The Australian of DFAT trade statistics.
The biggest fall was in lithium exports, which plunged by more than 80 per cent from $7.8bn in the first five months of 2023 to just $1.7bn as China has diversified its sources of supply. Troublingly for Canberra, Australia’s most important export iron ore fell 10 per cent, or $4.7bn worth, during the period from $46.1bn to $41.4bn as China’s property turmoil continued.
Those falls in two of Australia’s biggest exports have far exceeded gains from relatively minor items removed from China’s blacklist, such as wine and lobster, which were key priorities on the Prime Minister’s last trip. Australian wine exports to China were worth less than $1bn in 2024, while the renewed lobster trade is worth less than $0.5bn.
Mr Albanese will tell the forum on Monday that it was imperative the two countries found areas for co-operation to slash pollution and meet the Paris agreement to limit global climate change.
“This is a task that will sometimes challenge us, but crucially, one that holds out such an extraordinary range of opportunities for us,” Mr Albanese will say.
Dr Forrest, the Fortescue founder, has warned the Pilbara, where his company makes all of its money, could become a wasteland without an urgent, government-backed leap into green iron.
However, BHP says the biggest reduction in carbon emissions from steelmaking over the next two decades will not come from reinventing iron ore mining, but advances in China’s ageing blast furnaces.
BHP’s Australia president, Geraldine Slattery, said decarbonizing steelmaking was a whole of sector challenge, and partnership was key to its success.
“We believe the best role we can play is as a strong partner now and into the future, working with our customers to invest in and foster the technology and process breakthroughs that will drive down emissions in steelmaking facilities not only in China, but around the world,” Ms Slattery said.
Rio said it was working closely with its Chinese customers to “leverage Australia’s high-quality iron ore and China’s manufacturing expertise” to drive real progress on emissions reduction.
“This visit is a valuable opportunity to deepen collaboration between suppliers and steelmakers,” said Kellie Parker, Rio’s chief executive, Australia.
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