By Peter Cai
The Beijing-based Chinese iron ore trading platform has scored a significant victory in its battle to become the key market for spot iron ore trade by securing Rio Tinto as one of its customers.
Rio, Australia’s largest iron ore producer, signed up to become a member of the China Beijing Metals Exchange or CBMX today.
‘‘We welcome the development of CBMX as it gives us a new option for selling any available tonnes to China, over and above those already contracted,’’ said Alan Smith, Rio’s iron ore president for Asia, in a statement. ‘ We look forward to the Exchange developing into a transparent, independent, efficient and sustainable iron ore trading platform supported by broad market participation.‘‘
Rio’s signing comes just a day after Brazilian mining giant, Vale, signed a memorandum of understanding with the state-backed CBMX yesterday.
BusinessDay understands that Vale’s agreement is not a decision to officially join the trading platform, but rather an indication of Vale’s support for the Chinese initiative.
The trading platform is an online mechanism that brings together buyers and suppliers of iron ore and it is expected to offer better transparency than current markets.
Australia’s third-largest iron ore producer, Fortescue Metals Group recently signed-up to the Beijing-backed platform.
BHP is the only major Australian iron ore producer not to sign up to the Chinese platform.
‘‘We are positively studying participation and are in principle supportive of any platforms that support market transparency and liquidity. Over the past year, we have actively worked with customers and other industry participants on such initiatives, such as Global Ore and the China Spot platform, ‘‘ BHP Spokeswoman said.
It is widely believed that BHP is supporting the Singapore-based Global Ore. And there is currently intense competition between the two rivals for customers.
Chinese executives from the Beijing-based platform have reportedly applied for Australian visas to personally present their cases to BHP, according to Chinese media.
The Beijing platform is backed by 26 Chinese steel mills and traders including Baosteel, Wuhan Iron and Steel, China Minmetals and Sinosteel.
The vice-chairman of China Iron and Steel Association, Wang Xiaoqi, told Chinese steel mills not to join the BHP-backed platform: ''We are still studying the platform [Global Ore]. Chinese steel mills can approach and communicate with it, but shouldn't join it as members.''
The Beijing-based platform is scheduled to start operations on May 8.