China is closer than it has ever been to converting its status as the world’s dominant commodity consumer into genuine pricing power, driven by an opaque but politically connected state enterprise that has spent the past year locked in an unprecedented confrontation with mining giant BHP — and is already looking beyond iron ore.
China Mineral Resources Group, known as CMRG, was established in July 2022 by the Communist Party’s central committee and the State Council, with industry veteran Yao Lin at the helm and a direct line to President Xi Jinping’s top economic adviser. With registered capital of 20 billion yuan (approximately $2.9 billion), it was designed from the outset not merely as a purchasing consortium but as a centralised instrument of commodity market power — a geopolitical blueprint, in the words of one academic who studies it.
The confrontation with BHP began in September when CMRG instructed executives at several of China’s largest steel producers, via unexpected phone calls, to stop purchasing Jimblebar — a medium-grade iron ore shipped from Western Australia that is sold almost exclusively to Chinese buyers. The directive was deliberately targeted: BHP had been central to the 2010 shift toward index-linked spot pricing that stripped Chinese buyers of bilateral bargaining leverage, and Jimblebar’s near-exclusive Chinese market made it an ideal pressure point. When BHP did not respond as CMRG had hoped, the group escalated within days, urging major mills and traders to avoid all new dollar-denominated seaborne cargoes from the miner. By November, a second BHP product, Jingbao fines, had been added to the restricted list specifically to block blending workarounds, and port authorities were pressed to raise storage fees to curb foreign stockpiling.
BHP’s incoming chief executive, Brandon Craig — currently the miner’s Americas boss and a former head of its Western Australian iron ore operations — is set to travel to Beijing imminently as he prepares to take the helm in July, with strong incentives to find a resolution. His predecessor Mike Henry described commercial negotiations as tough but said the overall relationship remained on track.
The standoff has sent shockwaves through the industry. Fortescue and Rio Tinto have already made concessions, agreeing to drop the internationally standard Platts pricing index for early 2026 shipments in favour of a Chinese domestic alternative — a significant symbolic victory for CMRG, which has publicly argued that current benchmarks rely too heavily on thin spot trades and overseas futures markets and unfairly disadvantage the world’s largest consumer. Rio Tinto and Fortescue also extended long-term supply contracts with CMRG by six months into 2026. BHP, whose structural position in the market is stronger and whose exposure to Chinese shareholders and lenders is more limited, has held out.
Yet even analysts sceptical of CMRG’s long-term leverage acknowledge the constraints are real for both sides. Australian iron ore remains structurally embedded in China’s steel supply chain for reasons of scale, quality and logistics reliability that cannot be easily replicated. “Neither side holds a credible exit,” said David Cachot, iron ore research director at Wood Mackenzie. “China cannot replace BHP’s iron ore, and BHP cannot replace China.”
CMRG’s methods have not been without controversy domestically. Regional steel mills, whose operations are rooted in China’s provinces rather than Beijing, have shown resistance to directives from a body they see as an attempt to wrest control from established industry groups. Some state-owned traders have quietly worked around CMRG directives, accepting reputational risk in exchange for profit. And scholars point out that earlier Chinese attempts to consolidate commodity purchasing power — before markets became as financialised and complex as they are today — met with only fleeting results.
What is different this time, proponents argue, is the degree of political support and the centralisation of power under Xi. CMRG’s elevated bureaucratic status has given it access to a wider range of coercive tools, from environmental and tax inspections of non-compliant mills to higher port fees. It has already displaced traditional trading houses as one of China’s top spot traders in iron ore, managing inventories across more than a dozen ports as a de facto strategic reserve.
And its ambitions extend further. Several officials familiar with the group’s direction say CMRG has begun showing serious interest in copper — a development consistent with its name and the broader logic of its mission. In December, a CMRG researcher presented on the global copper market at a Shanghai industry forum. No formal move has yet been announced. As Fortescue CEO Dino Otranto observed: “They are the China Mineral Resources Group — they are actually a lot bigger than just iron ore. They are an investment vehicle.”
