China has escalated its pricing dispute with BHP Group by instructing domestic steel mills and trading firms to suspend all new purchases of the Australian mining giant’s iron ore cargoes. This move, reported by Bloomberg on Monday, has sent ripples through global commodity markets and intensified pressure on Australia’s mining industry. The directive was issued by China Mineral Resources Group (CMRG), a state-owned entity established in July 2022 to centralize iron ore imports. CMRG has urged major Chinese steelmakers and traders to halt purchases of BHP’s dollar-denominated seaborne iron ore, effectively freezing new contracts and impacting shipments already en route from Australian ports. Only a limited volume of BHP cargoes already in China remains tradable. The decision follows a series of failed negotiations between Chinese and Australian representatives last week, with neither CMRG nor BHP providing public comments. The impasse stems from disagreements over pricing models, with BHP advocating for an annual pricing system tied to the 2024 Platts average ($109.50 per metric ton), while Chinese buyers pushed for quarterly terms linked to lower spot prices. Since September, CMRG has already advised domestic steelmakers to cease purchasing BHP’s high-grade Jimblebar fines due to stalled long-term contract talks. This has led Chinese buyers to explore alternative sources, including Brazil and Guinea’s Simandou region, where Chinese investments are expected to yield significant iron ore production starting this November. Analysts argue that China’s reliance on Australian iron ore, which accounts for 40% of its imports, has left it vulnerable in pricing negotiations. The Simandou project, once fully operational, is projected to supply 120 million tonnes annually, reducing China’s dependence on Australian sources. The dispute underscores broader concerns about pricing power and transparency in global iron ore markets, with Chinese media criticizing the influence of Western capital in shaping Platts benchmarks. The situation also recalls the 2009 case of Stern Hu, a former Rio Tinto executive accused of spying on China’s steel industry, which reportedly weakened China’s bargaining position in past negotiations.