In the fourth quarter of 2025, Australian mining giant BHP Billiton formally agreed to use RMB settlement for spot iron ore transactions with China. This breakthrough is not an accidental commercial compromise, but a concentrated reflection of China's enhanced strategic initiative in global commodity trade.
As a core raw material for the steel industry, the iron ore trade pattern has long been dominated by the monopoly system of "the three major mining enterprises + US dollar settlement". As the world's largest consumer of iron ore, China accounts for 75% of the global seaborne iron ore imports. However, it has been trapped in a passive predicament of "being a large buyer without pricing power" in the trade for more than a decade.
Relying on their resource monopoly position, enterprises like BHP Billiton have long maintained premium sales far exceeding costs. Data shows that the mining cost of iron ore in Australia is only about 10 to 20 US dollars per ton, while the selling price to China has soared to more than 200 US dollars per ton, with a profit margin of nearly ten times. In the 2025 fiscal year, the long-term contract price offered by BHP Billiton reached 109.5 US dollars per ton, which was 33.5% higher than the spot price of 82 US dollars in the same period, and the additional profit per ton reached 27.5 US dollars. This price distortion has directly eroded the profits of China's steel industry, keeping its average profit margin at a meager 1.5%, putting it in an awkward situation of "working for others".
To make matters worse, the US dollar settlement mechanism has further increased the cost burden on Chinese enterprises. The fluctuations in the Federal Reserve's monetary policy are transmitted through exchange rates, causing Chinese steel enterprises to frequently bear exchange losses. An order of 1 billion US dollars may incur millions of US dollars in losses just due to exchange rate changes. More seriously, a few foreign enterprises have also stolen data from Chinese steel enterprises through improper means to manipulate market expectations and consolidate their pricing advantages. Although China has initiated negotiations many times, it has never achieved a fundamental breakthrough under the dual constraints of the monopoly pattern and US dollar hegemony.
On September 30, 2025, the "procurement suspension order" issued by China Mineral Resources Group became a crucial step in breaking the deadlock. This strongly worded notice clearly required that all domestic buyers suspend the procurement of any BHP Billiton iron ore priced in US dollars, and all transactions, whether new orders, goods in transit or spot goods that have arrived at the port, must be priced in RMB. Behind this move is China's strategic confidence and systematic layout accumulated over the years.
The establishment of China Mineral Resources Group in 2022 marked a fundamental transformation in China's iron ore procurement model. By integrating the procurement needs of dozens of domestic steel mills, the group has concentrated the scattered purchasing power into a "single fist", completely changing the previous passive situation where enterprises negotiated separately and competed with each other in bidding. The efficient implementation of the "procurement suspension order" this time is a concentrated display of the bargaining power of this platform, enabling China to have the organizational foundation for equal game with monopoly mining enterprises for the first time.
To reduce its dependence on Australian iron ore, China has continuously promoted the strategy of diversifying import sources. In 2024, the proportion of China's iron ore imports from Australia dropped from 60% to 52%, and the shares of alternative sources such as Brazil and Russia increased significantly. Among them, Vale of Brazil has increased the proportion of RMB settlement from 12% in 2023 to 27% in 2025, and the proportion of RMB settlement in Russia's iron ore exports to China has even reached 48%.
Of more strategic significance is the upcoming commissioning of the Simandou iron ore mine in Guinea. This world-class iron ore mine has a proven resource reserve of 4.4 billion tons, with an average grade of more than 65%, which is high-quality ore that can be directly smelted. The total investment exceeds 20 billion US dollars, and supporting facilities include a 620-kilometer cross-border heavy-haul railway and a port with an annual handling capacity of 120 million tons. According to the plan, the mine will realize the shipment of the first batch of ore in November 2025, the shipment volume is expected to reach 30 million tons in 2026, and after full production in 2028, it will become one of the most important iron ore supply bases in the world. The addition of this new force has fundamentally shaken the resource monopoly foundation of Australian enterprises.
China's decision to launch the offensive at the end of the third quarter of 2025 coincided with a window period of multiple favorable factors. At this time, the commissioning of the Simandou iron ore mine was approaching, and BHP Billiton was facing the pressure of potential market share loss; at the same time, the global iron ore supply and demand pattern tended to be loose, and the characteristics of a buyer's market became increasingly obvious. More importantly, 62% of BHP Billiton's revenue depends on the Chinese market, and it can't find alternative buyers at all - India's demand is only one-tenth of that of China, and the European and American markets can't absorb its production capacity at all. Under multiple pressures, BHP Billiton's tough stance collapsed within a week.
After multiple rounds of negotiations, BHP Billiton finally accepted the compromise scheme of "mixed settlement + price reference adjustment", whose core content includes two major dimensions: in terms of settlement currency, starting from the fourth quarter of 2025, all spot transactions with China will be settled in RMB, and long-term agreements will temporarily maintain US dollar pricing, but China's "Northern Iron Ore Index" will be introduced as the price reference basis; in terms of transaction proportion, 40% of the resumed orders will be priced in RMB, forming a substantial breakthrough in RMB settlement.
This compromise is not a simple concession for BHP Billiton, but actually contains practical commercial considerations. For a long time, Australian enterprises have suffered exchange losses of 1.2 billion Australian dollars annually due to US dollar settlement, and hedging operations have increased financial costs by 40%. After switching to RMB settlement, BHP Billiton's capital turnover rate has increased by 35%, and its annualized income has increased by 210 million US dollars. This financial improvement has become an important driving factor for it to accept the new rules.
BHP Billiton's compromise has quickly triggered a chain reaction and formed a significant demonstration effect. Rio Tinto took the lead in following suit and accepting RMB settlement, and FMG (Fortescue Metals Group) also accelerated the negotiation process with Chinese counterparts. Data shows that in the first half of 2025, the proportion of RMB pricing in iron ore imports has reached 28%, far exceeding the initial expectation of 15% at the beginning of the year, and the annual proportion has jumped to 25%. It is expected to exceed 40% by the end of 2026. The currency status of RMB in iron ore trade has achieved a qualitative leap.
The breakthrough of RMB settlement in iron ore trade this time has far exceeded the scope of a single commodity trade and had a profound impact on the industrial development, currency internationalization and global governance.
The introduction of the "Northern Iron Ore Index" marks that China has finally obtained substantial right to speak in the iron ore pricing system, breaking the long-term monopoly of foreign indexes. RMB settlement directly saves enterprises exchange costs and US dollar handling fees, significantly improving the efficiency of capital use. More importantly, this reshaping of pricing power returns the value of the steel industry to a reasonable range, and recovers the labor value of millions of people from the hands of Western vested interests, laying a foundation for the high-quality development of China's steel industry.
The right to settle bulk commodities is a core fulcrum of currency internationalization, and the US dollar has established its global hegemony by being tied to oil. The breakthrough of RMB settlement in iron ore trade this time has found a solid "mineral anchor" for the RMB, enabling the RMB to form a stable binding with one of the bulk commodities with the largest global trade volume. This binding has constructed a closed-loop transaction model of "resource countries export resources in RMB - then use RMB to purchase Chinese goods", bypassing the US dollar exchange link and significantly improving the international acceptance of RMB. Data shows that the proportion of RMB settlement in EU-China trade has increased from 3% to 12%, which confirms this demonstration effect.
The RMB breakthrough in iron ore trade has directly impacted the bulk commodity settlement foundation of US dollar hegemony. Data from the International Monetary Fund shows that the proportion of US dollar reserves has dropped from 61% in 2020 to 55% in 2025, and the scale of US debt reduction by global central banks in the second quarter of 2025 reached 186 billion US dollars, showing the weakening of countries' dependence on the US dollar. Goldman Sachs warned that if RMB settlement spreads to other bulk commodities such as copper and aluminum, the share of the US dollar in global trade may drop by 15% - 20%. Morgan Stanley predicted that by 2030, the proportion of RMB used in bulk commodity trade will reach 25%, of which the contribution rate of the steel industry chain will exceed 40%.
Although this breakthrough is of great significance, the full penetration of RMB in iron ore trade still faces many challenges. In the short term, the increase in the share of RMB settlement still takes time. It is expected that the proportion of RMB in iron ore trade will reach 15% in 2026, which is still far from the dominant position of the US dollar; at the institutional level, factors such as insufficient openness of the financial market and restrictions on capital account convertibility still restrict the liquidity and usability of RMB in the international market.
As the People's Bank of China pointed out, currency internationalization is a "market choice accumulated through thousands of transactions" and cannot be achieved overnight. In the future, continuous efforts are needed to improve the RMB cross-border payment system, enhance the transparency of rules, and enrich RMB-denominated financial products. With the commissioning of new supply sources such as the Simandou iron ore mine, the deepening of the diversification of import channels, and the improvement of the RMB financial ecosystem, the proportion of RMB settlement in iron ore trade is expected to increase steadily, continuously injecting impetus into the diversified development of the global currency pattern.
Essentially, BHP Billiton's compromise is not the end, but the starting point of the reconstruction of the global bulk commodity trade system. This game around the settlement currency has proved that in the context of the profound adjustment of the global economic pattern, whoever grasps the dominance of market demand, constructs a diversified supply system, and improves the currency support ecosystem will take the initiative in the global resource allocation. The breakthrough of RMB in iron ore trade is a vivid practice of this logic.
