China Mineral Resources Group has directed domestic steel mills to suspend purchases of Rio Tinto's Pilbara Blend ore during critical contract negotiations, using China's near-60 percent revenue share of the miner to press for better terms. The state-backed buyer, founded in 2022 to centralize iron ore procurement, risks disrupting supply flows and pricing benchmarks if talks stall.
China Mineral Resources Group has told domestic steel mills to stop buying Rio Tinto's Pilbara Blend ore while contract negotiations with the Anglo-Australian miner reach a critical stage, according to people familiar with the matter. The directive, reported by Bloomberg, targets the benchmark grade that underpins much of Rio Tinto's iron ore shipments to China, which supplied nearly 60 percent of the miner's revenue last year.
"China Mineral Resources Group notified domestic steel mills to suspend purchases of Pilbara Blend ore for the time being as contract negotiations entered a critical stage," a person with direct knowledge of the directive said.
The state-backed buyer, founded in 2022 to centralize iron ore procurement, is using its concentrated purchasing power to press for more favorable terms in annual supply contracts. China's near-60 percent revenue share gives the group outsized leverage over Rio Tinto, whose largest shareholder base includes Aluminum Corp. of China, or Chalco (02600.HK), a major Rio Tinto investor. The suspension effectively halts spot buying of the Pilbara Blend grade across China's steel sector until a deal is reached.
The standoff carries supply-side risk for the seaborne iron ore market, where China is the dominant buyer and Rio Tinto one of the top three producers alongside BHP Group and Vale. A prolonged impasse could redirect Chinese mills toward alternative grades or suppliers, pressuring the pricing benchmarks that anchor annual contracts. The outcome of the talks, expected in the coming weeks, will determine whether the centralized buyer secures a structural discount or whether supply flows to China face disruption.
