“These initiatives will span our economy from critical mineral extraction, supporting the transition of metals and heavy industries to net zero, and providing a future for advanced manufacturing in this country,” Ayres’ letter said.
Ayres, a former manufacturing union official, has authorised a $5 million funding boost to the commission and demanded speedier probes into allegedly dumped items.
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Ayres and Treasurer Jim Chalmers are grappling with demands from smelters – some of which may not be competitive even without competition from China – for bailouts at a time when the federal budget is facing headwinds from social and defence spending.
The government is pushing on with its $23 billion Future Made in Australia program that aims to turbocharge strategic green sectors. Critics have argued the fund is wasting money by backing firms in areas like solar panels dominated by China, but the government believes old-school industry policy has new-found significance as the US, Europe, Japan and other like-minded nations respond to China’s manufacturing dominance through subsidies.
China’s steel industry, like many that Beijing considers strategic, has been overproducing for years, triggering a lack of profitability. However, Chinese President Xi Jinping has been trying to pull back on so-called “involution”: deflationary price wars in strategic sectors such as steel and EVs that risk Chinese growth.
Australia imported $3.34 billion worth of iron and steel products from China in 2024.
Much of the iron ore used to produce that steel came from Australian firms such as BHP, which is locked in a dispute with China’s state-controlled iron ore trader as it tries to curb miners’ power to set prices. Its moves have included reportedly instructing Chinese firms not to buy iron ore from BHP, though ships carrying the company’s products are still departing for Chinese ports.
Prime Minister Anthony Albanese said this week he was concerned about reports of a purchase ban but characterised the dispute as a pricing issue.
“Sometimes when people are negotiating over price, sometimes these things will occur,” Albanese said. “I want to see this resolved quickly.”
Iron ore trade to China is worth more than $100 billion a year and helps prop up the federal budget. Investment bank UBS estimates BHP ships 85 per cent of its iron ore to China, up from 73 per cent a decade ago, while about 80 per cent Rio Tinto’s China.
Head of mining research at investment bank Barrenjoey, Glyn Lawcock, said iron ore prices had been surprisingly strong this year, but he did not think China’s row with BHP would change the price of the commodity.
Lawcock said it was “physically impossible” for China not to buy iron ore from BHP, due to the sheer quantity the miner supplied, and the two sides would ultimately reach an agreement.
“When your contracts come up for renewal you sit down to renegotiate. If you’re a large player, you would want to exert influence,” Lawcock said.
Lawcock said the commodity’s price had been resilient this year because of “reasonably high” demand for the commodity from Chinese steel mills, and China was now trying to use its market clout to negotiate better terms.
Over the longer term, analysts expect the price of iron ore to decline to about $US85 a tonne by 2030 because of new sources of supply. The China-backed iron ore development in Simandou in Guinea – where Rio Tinto is a partner – is due to start making shipments later this year.
This masthead reported on Tuesday that Australia was throwing its weight behind a global WTO crackdown on oversupply of goods such as EVs amid heightened alarm that China’s control of about 40 per cent of global manufacturing would threaten Western competitors and hand Beijing coercive power in key sectors.
The government’s focus on EV oversupply prompted the Climate Change Authority’s Matt Kean to push back and spruik the benefit of cheap EVs to reaching Australia’s climate targets, highlighting the range of competing imperatives at play when dealing with China on trade.
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