Chinese steel mills aim to gain a greater say in the iron ore business by preferring Yuan-based settlements. On 13 May, the major mining company, BHP Group announced that it had completed its first vending of iron ore to Chinese Iron and Steel company, Baosteel, using Chinese currency. As per the announcement, the first blockchain iron ore transaction is set to between BHP and Baosteel will be completed soon.
Baoshan Iron and Steel Co Ltd (Baosteel) is a part of China Baowu Steel Group. Following the company’s successful Yuan purchase deals with Brazil-based Vale and Australia’s BHP Group earlier, the Chinese firm settled a 100 million yuan with mining company Rio Tinto Plc using blockchain technology.
First blockchain iron ore transaction worth $14.1 million (100 million yuan)
Early in January, Baosteel successfully closed a deal worth 330 million yuan of iron ore, with Brazil mining outfit Vale in the denomination of yuan. The first blockchain iron ore transaction between BHP and Baosteel reached back in April, is worth 100 million yuan.
In fact, China is the world’s largest consumer of iron ore. Back in 2019, the country purchased 1 billion tonnes of steel-making raw materials as it seeks to procure more influence in the pricing of iron ores. The operational director of Dididsteel, Zhang Tieshan, anticipates that more deals to be inked using the Chinese yuan; as China accounts for a large percentage of iron consumption.
“China Baowu is not only China’s largest steel-maker, but also a pioneer in state-of-the-art technology application. Exploring the possibilities of yuan-denominated settlement via blockchain is a new proof,” Zhang stated.
Baosteel advocating for yuan settlements in iron ore trade
Baosteel has been advocating for yuan-denominated settlements in the iron ore trade since 2019. The Chinese company announced back in February that it had completed deals amounting to 240 million yuan in iron ore with foreign dealers in South Africa and Ukraine.
Chinese iron ore imports surged by over 11% back in April as compared to a month earlier; as Chinese steel mills rushed to rejuvenate the production rate following the damages and disruptions caused by the COVID-19 pandemic.