China, BHP and Rio unhappy as Canberra steels for tariff showdown on Chinese rail wheels after Australian wine win
Australia’s Anti-Dumping Commission has accused Chinese steelmakers of dumping rail wheels, defying protests from China and mining giants BHP and Rio Tinto as the agency asserts its independence.
Australia’s Anti-Dumping Commission has accused Chinese steelmakers of dumping rail wheels, defying protests from China and mining giants BHP and Rio Tinto as the agency asserts its independence after claims it was leant on to secure a “package” deal to end Beijing’s wine tariffs.
The provisional recommendation by the Anti-Dumping Commission was released as Beijing on Thursday evening agreed to end its more than 200 per cent tariffs on Australian wine.
The Commission’s provisional recommendation underlines the political uncertainty that will continue to hang over Australia’s trade with China, even as the Albanese government has succeeded in lowering tensions in the relationship.
Minister for Industry and Science Ed Husic will be given a final recommendation by the commission by June 6, which could be days before an expected visit to Australia by China’s Premier Li Qiang.
China’s Commerce Ministry, which has said it offered Australia a “package” deal to end the wine tariffs, has protested the anti-dumping measures, arguing claims of “‘so-called ‘government distortion” in the Chinese steel industry were unfair.
“Australia should terminate the anti-dumping measures against China’s railway wheels,” Beijing’s top economic ministry said in a submission.
The looming tariff decision comes as Prime Minister Anthony Albanese spruiks a “made in Australia” future ahead of May’s budget.
“I want a future made in Australia,” the Prime Minister said on Thursday on a pre-budget visit to Newcastle, speaking hours before Beijing’s wine reversal.
The Anti-Dumping Commission’s provisional report was released on the eve of the Easter break, only days after the World Trade Organisation — in a case brought by China against Australia — found the Canberra-based commission had not given an “adequate and reasonable explanation” for its decision to increase its estimates of the Chinese producers’ costs of making certain steel goods, including railway wheels.
The Australian government has accepted that decision and waived its right to appeal. Trade Minister Don Farrell said Australia would “engage with China and take steps to implement the panel’s findings.”
It is not clear how Beijing will respond to the Commission’s new recommendations, but they indicate the Australian government agency will continue to impose China-specific tariffs where it deems them appropriate.
The commission’s provisional recommendation in the rail wheels case is for an existing tariff on Chinese producers to be reduced from 17.5 per cent to 13.3 per cent.
Finding the Chinese-state owned firms had a history of dumping their product in Australia, the commission has recommended the tariff be extended at the new rate to protect Newcastle-based domestic producer Molycop, also known as Comsteel, which last year cut its workforce by 250 jobs as it has struggled to compete with rivals in China.
Molycop’s factory, which is located in Labor MP Sharon Claydon’s seat of Newcastle, is the only remaining domestic producer and has about a 30 per cent share of the Australian market, according to the Commission’s analysis. All the other producers are Chinese state-supported firms.
Beijing’s history of launching tariff counterpunches will raise concerns among Australian businesses with deep exposure to Chinese government decisions.
BHP, Rio, Fortescue and Gina Rinehart’s Roy Hill are the main customers of the railway steel wheels, which are used to transport Australian iron ore which overwhelmingly goes to China.
Mining giants BHP and Rio Tinto — Canberra’s largest taxpayers because of their hugely profitable, China-reliant businesses — both have made submissions opposing the tariff.
One of the Chinese firms hit with the tariff is Baowu Group Masteel Rail Transit Materials Technology Company Limited, a subsidiary of China’s state-owned Baowu, the world’s biggest steel maker and a top customer for BHP and Rio’s iron ore operations.
BHP savaged Comsteel’s output, arguing the Newcastle’s firms railway wheels were “materially inferior” and had “safety concerns”. BHP, known as the “Big Australian”, said it had not purchased a wheel from the Australian manufacturer since 2019.
Rio Tinto said Baowu Group Masteel Rail Transit Materials had not been dumping. “[Baowu’s] cheaper on a price point comparison because they have invested heavily in automation and improved business practices – whilst still producing the better-quality product,” Rio Tinto argued.
The Anti-Dumping Commission disagreed, finding that “the goods exported from China were dumped during the inquiry period.”
BHP, Rio Tinto and iron ore’s “third force” Fortescue — which helped Australia last year hit a record $203 billion of exports to China — have this week all been working to shore up political ties with Beijing.
BHP’s CEO Mike Henry and Rio’s Jakob Stausholm both gave speeches at the China Development Forum, talking up Beijing’s leadership.
Fortescue’s executive chairman Andrew Forrest on Thursday cited his close reading of Xi Jinping in an address to the Boao Forum, another international business-focused meeting in China. “As President Xi has asked of us all – in the letters I have read and the thoughts I have studied from his youth – we must protect the environment,” Mr Forrest said.
“China has shown the world how to build renewable energy assets at scale, it has shown us how to drive down the cost of renewable energy, and … it must show us how to use them,” he added.
On the eve of Chinese Foreign Minister Wang Yi’s recent visit to Australia, Beijing had good news in a separate case concerning steel wind towers. Minister Husic ordered, on the advice of the Anti-Dumping Commission, the end of a 10.9 per cent tariff on Chinese producers.
Australian wind tower maker Keppel has suggested that the decision was traded for an end to China’s wine tariffs, a claim the government has denied.
Assistant Trade Minister Tim Ayers on Friday said he was “confident” that China’s remaining sanctions on beef and live lobster could be worked through before the next federal election, but cautioned “the proof is always in the pudding”.
Senator Ayers said the end of Beijing’s wine tariffs “means jobs in regional towns”, but said Australian producers should exercise caution with the Chinese market.
“It’s never good to put all of your eggs in one basket in business terms,” he said.
Additional reporting: Sarah Ison
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