The Australian Government is closely monitoring new iron ore pricing arrangements being trialled between Chinese buyers and major Australian producers, amid potential implications for federal revenue.

Federal Resources Minister Madeleine King said iron ore remains central to the national economy, with exports from the Pilbara playing a significant role in supporting both communities and the Commonwealth budget.

King said the pricing changes are part of commercial negotiations between mining companies and their customers.

“We have to let that play out, and we keep an active watch on it at all times, as everyone does on the iron ore price these days,” she said.

The government is monitoring the discussions for any potential impact on the budget bottom line.

Iron ore is Australia’s highest-earning commodity export, and company tax and royalties from the sector make a substantial contribution to public finances. Treasury estimates indicate a $10 movement in the iron ore price would affect tax receipts by around $500 million in the 2025–26 financial year.

Government forecasts show iron ore exports are expected to total approximately $114 billion over the next year.

China Mineral Resources Group (CMRG), the country’s centralised iron ore buying agency, is understood to be encouraging producers to adopt alternative price-setting mechanisms. This includes moving away from the long-established S&P Global Platts benchmark towards pricing references such as Fastmarkets or the Chinese-owned Mysteel.

Reports indicate that Fortescue and Rio Tinto have shifted a portion of their iron ore sales to Fastmarkets pricing. Meanwhile, CMRG and BHP have reportedly been engaged in extended negotiations over pricing arrangements, with some shipments to China affected during the discussions.

The Australian Financial Review has reported that a newly referenced benchmark has delivered lower prices in a majority of trading sessions, raising questions about the potential revenue implications for producers and, by extension, government receipts if broader adoption occurs.

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