en.Wedoany.com Reported - China Mineral Resources Group (CMRG) has commissioned several steelmakers to study the characteristics of a new low-grade iron ore product from Australia's Fortescue, amid a stalemate in negotiations over a long-term supply contract.
Sources familiar with the matter revealed that CMRG has asked steel companies heavily reliant on Fortescue's ore to request more quality information from the Australian producer regarding the new product. Named Fortune Fines, this low-grade concentrate has yet to be shipped to customers.
Although another major mining company, BHP, reached an agreement with CMRG earlier this year, Fortescue's long-term contract negotiations have not progressed as smoothly as expected. Sources noted that disputes over product quality and market promotion are common when launching new iron ore products.
A Fortescue spokesperson stated that the company will continue to communicate with CMRG but declined to comment on confidential commercial negotiations. CMRG was not immediately available for comment.
In terms of stock performance, Fortescue shares fell as much as 3.1% on Tuesday, hitting an intraday low of A$21.82, before recovering most of the losses. Singapore iron ore futures rose 0.8%, later trading around $105 per ton.
Fortescue is expected to complete negotiations on a long-term agreement with CMRG in the coming months, with existing short-term arrangements having been extended. Any escalation of disagreements over the Fortune Fines product, which has an iron content of 55%, could hinder the final agreement.
This move is CMRG's latest attempt to rebalance the negotiating position in the iron ore market in China's favor and weaken the influence of the world's largest producers. Previously, after months of negotiations, BHP signed an agreement with CMRG in April, valid until June 2027, using a pricing index partially denominated in yuan.
Fortescue, the world's fourth-largest iron ore producer, is seeking to strengthen its position in China this year: the company has expanded its executive team in China and actively emphasized the scale of its investments in the Chinese market. Executive Chairman Andrew Forrest has previously criticized CMRG's activities, alleging that the group is attempting to establish a "cartel."
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