Doha [Qatar], March 4: The iron ore trade between Australian miners and Chinese buyers has long followed a familiar, bruising pattern. Tense negotiations and hard-fought battles last for months over one figure, the price per tonne. But now, another question has emerged: which currency to use.
In late 2025, reports surfaced that China Mineral Resources Group (CMRG) had instructed traders to stop buying US dollar-denominated iron ore from the Australian mining and metals giant BHP - news that drew global attention.For Australian miners, it might have looked like only the latest chapter in a long-running commercial dispute. But for China, thousands of miles away, it could form part of a much broader strategy: advancing the yuan's rise on the global stage.
That push has political backing at the highest level. In a 2024 speech, President Xi Jinping outlined his vision for China to become a financial "powerhouse" or "superpower", putting a "strong currency" - one with global reserve status - at the top of six core priorities.
The remarks were recently published in Qiushi, the ruling Communist Party's leading theoretical journal, ahead of the annual "two sessions", one of the country's most important political events.
"Although China is already a major financial country it is not yet strong overall," Xi had said. "Building a financial powerhouse requires long-term effort and sustained perseverance." An analysis led by Lian Ping, director and chief economist at Guangkai's Chief Industry Research Institute, argued that the sheer size of the Chinese market "makes advancing the yuan's internationalisation, with commodities as the anchor, an inevitable and viable path".
In November, while the stand-off between BHP and CMRG was still reverberating, the authors - writing in China Forex, a publication overseen by the State Administration of Foreign Exchange identified iron ore and crude oil as crucial commodities supporting the yuan's shift "from a marginal currency to a key pricing currency".
That argument has gained weight in recent months, as confidence wavers in the US dollar and the assets it backs. Long the bedrock of the global financial system, the currency is under pressure as global investors diversify amid concerns over Washington's policy swings, US debt sustainability and the Federal Reserve's independence.
"Logically, the world's biggest buyer should have pricing power - but that hasn't been the case," said Rui Meng, a finance professor at the China Europe International Business School in Shanghai. "The rules of the game were written by others." As China's steel industry exp
anded rapidly in the 1990s and 2000s, a triumvirate of companies - Australia-based BHP, British-Australian giant Rio Tinto and Brazil-based Vale - dominated the seaborne iron ore trade. Prices were set in US dollars under an annual benchmark system negotiated between major miners and steelmakers. With limited bargaining power, Chinese mills had little choice but to accept those terms.
Around 2010, that system gave way to US dollar-denominated index pricing. Even though China now accounts for roughly 75 per cent of global seaborne iron ore imports, sellers still hold most of the pricing power.
Attention is now turning to whether this outsized share of global demand for bulk commodities could deliver a breakthrough - and Beijing's leverage has grown. The creation of CMRG in 2022 signalled an effort to centralise iron ore procurement and turn previously fragmented demand into collective bargaining power.
China has also moved upstream, expanding domestic mining and taking major stakes in overseas projects - such as Simandou in Guinea, one of the world's largest untapped high-grade deposits - to build supply chains less dependent on the traditional giants.
In January, the first shipment of nearly 200,000 tonnes of ore from Simandou arrived in China, according to Baowu, the country's largest steelmaker. The firm said the project, fully commissioned in November, was expected to supply about 120 million tonnes of premium iron ore annually, once at full capacity.
Modest but symbolic steps towards yuan pricing have also taken shape. In 2020, Chinese steel giant Baosteel completed its first yuan-denominated iron ore purchases from each of the three major producers. During last year's tense stand-off between BHP and CMRG, industry media outlets such as SteelOrbis reported that BHP may have agreed to settle about 30 per cent of its spot sales to China in yuan from the fourth quarter of 2025 - though neither company has publicly confirmed this.
The South China Morning Post reached out to both BHP and CMRG for comment. CMRG did not immediately respond, while BHP said that it did not comment on the details of commercial negotiations.
In a half-year operational review released in January, BHP announced it was "currently negotiating annual contract terms" with CMRG.
For Chinese steel mills, pricing in yuan could reduce exposure to exchange rate volatility, stabilise input costs and align prices more closely with actual demand and spot levels.
More broadly, it opens the door to reducing dependence on the US dollar. Foreign producers receiving yuan may be encouraged to reinvest those proceeds into Chinese goods or yuan-denominated assets, potentially generating a self-reinforcing cycle of currency circulation.
US dollar dominance rests on the depth and openness of American financial markets. By contrast, analysts said yuan internationalisation was more likely to advance through China's clout as the world's largest trader. The goal was not to dethrone the US dollar, they added, but to reduce exposure to sanctions and other financial risks.
"We should leverage our strength in trade and advance gradually," Rui said, noting that Beijing was unlikely to push its currency too aggressively if it threatened financial stability.
About 30 per cent of China's cross-border trade was now settled in yuan, the People's Bank of China said at a press conference in January. Beyond iron ore, China is also making inroads in other strategic commodities. An Allianz Trade report published late last year said China had "leveraged its position as the world's largest importer of raw materials to gradually price strategic goods in [yuan]".
The report's authors cited the Shanghai International Energy Exchange's yuan-denominated crude oil futures, launched in 2018 and already the world's third largest by trading volume by 2020.
Source: Qatar Tribune