BHP completes first yuan-based iron ore sale to China's Baosteel

[BEIJING] The world's top listed miner BHP Group said on Tuesday it had made its first yuan-denominated sale of iron ore to China Baoshan Iron & Steel Co Ltd, known as Baosteel, and would explore using blockchain for such transactions in future.

The deal, worth nearly 100 million yuan (S$20 million), shows the Chinese currency is making further inroads in iron ore trade after Baosteel, the listed arm of the world's biggest steelmaker China Baowu Steel Group, bought for iron ore from Brazil's Vale SA in yuan in January.

BHP is expecting to be able to complete its first blockchain iron ore transaction with Baosteel soon, it said in a statement.

China, the largest iron ore consumer, brought in over 1 billion tonnes of the steelmaking raw material last year and has long sought to gain influence over pricing to help its steel firms weather market fluctuations.

In a separate statement, Baowu noted it had now struck yuan-based deals with the "three giants" of iron ore - BHP, Rio Tinto and Vale.

The fourth-biggest iron ore miner, Australia's Fortescue Metals Group, is also selling in yuan after setting up a trading entity in China in April 2019.

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"The active promotion of renminbi settlement in iron ore transactions is not only for operational needs, but also in line with the trend of yuan internationalisation," Baowu said, adding that it had recently concluded its first yuan-based iron ore purchase supported by blockchain technology with Rio Tinto.

China's iron ore imports jumped more than 11 per cent in April from a month earlier as steel mills raced to restore production after the coronavirus pandemic paralyzed the economy earlier in the year.

REUTERS