PERTH, Australia, April 28, 2026, 05:10 (AWST)
Fortescue Ltd is nearing a deal with China’s state-backed iron ore buyer, according to a Monday report from Bloomberg, a move that could mark the miner’s entry into Beijing’s ongoing bid for greater sway over iron ore contracts. This comes after BHP Group resolved a different dispute. No details on the agreement were given, and the source with knowledge of the talks was not identified.
China Mineral Resources Group (CMRG) is shaking up a market that’s long run on seaborne dollar benchmarks. Set up in 2022 to centralise iron ore purchases and squeeze out better terms, CMRG recently told mills they could resume buying BHP cargoes—lifting curbs that lasted more than half a year, Reuters reported earlier this month. The standoff, RBC analyst Kaan Peker told Reuters, “had escalated” to the point where some kind of resolution became necessary. Reuters
Fortescue faces two main issues: price and access. According to people familiar with the matter cited by Bloomberg and republished by Mining.com, Rio Tinto and Fortescue have already started testing a new pricing method that moves away from the Platts index—long a staple for seaborne contracts. In this trial, Fortescue is relying on an average of Mysteel and Argus. A price index, in this context, serves as the standard for translating a shipment into dollars per tonne.
Fortescue heads into negotiations with a bit of momentum. Iron ore shipments hit 48.4 million tonnes in the March quarter, a 5% increase from last year. The company stuck to its fiscal 2026 shipment outlook—still targeting 195 million to 205 million tonnes. But Iron Bridge stands out as the trouble spot: guidance has been trimmed to 9 million-10 million tonnes, down from 10 million-12 million, after cyclones disrupted operations.
Costs are still very much in focus. Fortescue logged a hematite C1 unit cost of US$18.29 per wet metric tonne for the quarter. C1, the cash-cost metric miners track, is sensitive to oil: according to the company, every US$10 swing in Brent crude shifts the cost by roughly 20 cents per wet metric tonne, all else unchanged.
So far, the market isn’t buying it. Fortescue shares ended Monday at A$19.77 on the ASX, barely budging after a 5.67% slide last Friday, Investing.com data showed. Investors are left debating if a China supply deal would simply stabilize output, cut into profit margins, or bring a mix of both.
China talks are coming into play as Fortescue pushes shareholders to back an expanded green-power plan for the Pilbara. The board just signed off on a US$680 million spend for 200 megawatts of firmed green energy—basically renewable power that’s supported by batteries or other systems so it keeps going even when wind or solar dip. That’s on top of the already green-lit US$6.2 billion decarbonisation initiative.
Fortescue expects the project to wrap up by 2028, joining a network that’s projected to feature 1.2 gigawatts of solar, 600 megawatts of wind, battery storage between 4 and 5 gigawatt hours, plus 620 km of transmission infrastructure. Executive Chairman Andrew Forrest said the new pitch targets data centres specifically, a segment pushing for steady, low-carbon energy.
Dino Otranto, CEO of Metals and Operations, rejected any suggestion that Fortescue is abruptly shifting focus from iron ore. Addressing analysts, he described the power initiative as “not a new pivot.” Still, he allowed it might turn into a “significant value driver” for the stock, as per the transcript from the company’s investor call.
Details haven’t faded into the background. Otranto told investors the company isn’t revealing revenue or margin targets for the new energy asset just yet, and execs kept the customer roster under wraps. On that call, Growth and Energy CEO Gus Pichot mentioned he’d met with CMRG not long ago—he said the talks were “going quite well.” Sales director Ben Kuchel added that Fortescue’s interactions with CMRG are still regular and ongoing.
There’s a risk Fortescue feels pressure from both sides at once. The company hasn’t confirmed any supply agreement with CMRG, and movement toward discounts, pricing in renminbi, or pegging to domestic Chinese indexes could squeeze realisations—that’s the price Fortescue actually gets compared to the industry benchmark. Out at Iron Bridge, weather setbacks still linger, and rising fuel costs keep nudging unit costs higher.
So, Fortescue is juggling two fronts right now: hashing out ore prices with China and hammering out deals with industrial buyers for green electricity. The company says it’ll update the market on its Pilbara plans in roughly three months. By that point, investors should get a clearer sense of whether the CMRG discussions and energy investments are holding margins steady or starting to push them thin.
