Baowu eyes stake in BHP’s massive Jimblebar iron ore mine
China’s largest steelmaker is weighing a minority interest in the Western Australian operation as it seeks iron ore supply.
China Baowu Steel Group is exploring the possibility of purchasing a minority stake in BHP's Jimblebar iron ore mine in Western Australia, according to two sources cited by Reuters. The Chinese steelmaker is considering an investment ranging from 15% to 25%, directly from its own holdings. Jimblebar is BHP's largest iron ore operation, contributing around a quarter of the miner's entire iron ore output.
Currently, BHP holds an 85% share in the mine, while Japanese trading firms Itochu and Mitsui have minority stakes. The Jimblebar mine, valued at approximately $3.2 billion when it opened in 2014, generates iron ore worth around $6.2 billion at today's prices. While Baowu has shown interest, no final decision has been made, and there is no guarantee that negotiations will lead to a deal.
This potential investment could strengthen commercial ties between one of Australia's largest mining companies and China, its biggest customer market. China's investment activity in Australia has faced increased scrutiny in recent years due to tighter regulations on transactions involving critical resources like lithium and rare earths.
However, this proposed investment follows the resolution of a six-month dispute between BHP and China Mineral Resources Group, allowing Chinese steel mills to resume purchasing some BHP iron ore shipments previously restricted. The companies have already collaborated on efforts to reduce emissions in steel production, with Baowu participating in trials using BHP's Pilbara iron ores for direct reduced iron production at one of its facilities.
Given the ongoing importance of China in global steel demand and Australia's heavy reliance on China as an export market, an investment in Jimblebar could provide Baowu with more exposure to Australian iron ore. For BHP, selling part of its Jimblebar stake could bring a major customer into its ownership structure while retaining control over the operation.
Nonetheless, any such transaction would occur amid Australia's heightened scrutiny of Chinese investments in strategic and critical resources, potentially adding a regulatory aspect to the negotiations.
Written by urgent.news from Mining.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
