China's dispute with Australia is so far skirting the biggest trade between the two countries, but analysts question how long it came remain immune.
Despite all the tension between the two countries, iron ore sales to China in the first half of 2020 were actually up more than 8 per cent, with the added bonus for Australia of a higher price.
However BHP, Rio Tinto, Fortescue and Roy Hill are heavily leveraged to China, and would be extremely vulnerable if Beijing decided to give iron ore the same treatment as, for example, barley."We actually supply China with about 60 per cent of their total iron ore consumption," observed Bell Potter analyst Giuliano Sala Tenna.
"So, at the moment, the status quo will be maintained only because we've seen with Chinese foreign policy that they don't tend to do things to their own detriment."Notwithstanding that, as China looks to make life harder for Australia, iron ore is already on its radar, with new customs protocols which, if enforced, could leave selected shipments stranded at the docks.
Helen Sawczak, who finished up last month as CEO of the Australia-China Business Council, warns that even though resources are lower down on the list of targets, they are not immune."Obviously companies will be reassessing their risk factors, and the political risk associated with working with China will obviously have a heightened significance at the moment.""We've seen China invest into the Simandou [iron ore] project in Guinea," he noted.
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