Top 1000 mining companies, such as Rio Tinto, BHP and Fortescue Metals Group, have very strong links to Asian economies.
In 2017, almost 56 per cent of Rio Tinto’s revenue was generated through sales to China and Japan, and an additional 12 per cent was generated through sales to other Asian economies.
Of the one billion tonnes of iron ore imported to China in 2017, over 65 per cent was produced by Australian firms however the relationship between China and Australian mining companies has changed over the past two years.
Since 2016, China has curtailed domestic production of commodities including coal, steel, and aluminium during winter in order to improve environmental conditions. This has had mixed effects on major Australian mining companies.
High-grade iron ore producers have seen the benefits as Chinese steel mills have increased demand for high grade iron ore which enables cleaner production. Both Rio Tinto and BHP produce high grade iron ore from the Pilbara region.
In contrast, Fortescue produces lower grade ore, and has had to offer increasingly large price discounts in order to maintain demand from Chinese clients.