Baowu eyes stake in BHP’s Jimblebar mine: Reuters

China Baowu Steel Group is exploring an investment in BHP’s (ASX, LSE, NYSE: BHP) Jimblebar iron ore operation in Western Australia, according to people familiar with the discussions cited by Reuters.

The Chinese steel giant is considering acquiring 15% to 25% of the mine from BHP’s existing interest, Reuters reported. BHP’s share of Jimblebar produced about 62.5 million tonnes of iron ore in fiscal 2026, close to one-quarter of the miner’s total output.

“BHP has a long history of partnerships at its assets, and regularly explores options that may create long-term value to its shareholders,” the company said in a statement after Reuters published its report.

No agreement has been reached and Baowu hasn’t decided whether to proceed, Reuters said.

BHP holds 85% of Jimblebar, with Japanese trading houses Itochu and Mitsui owning the balance. When the mine opened in 2014, BHP put the value of its interest at $3.2 billion. Reuters estimated BHP’s fiscal-2026 production from Jimblebar was worth about $6.2 billion at current iron ore prices.

Trade ties

The possible transaction comes as Chinese investment in Australia has declined amid greater national-security scrutiny of foreign acquisitions. Canberra has blocked some Chinese investments in sectors including lithium and rare earths, and China is no longer among Australia’s 10 largest sources of foreign investment, Reuters reported.

It also follows the settlement in April of a dispute between BHP and state-backed China Mineral Resources Group. The disagreement had lasted more than six months and restricted purchases by Chinese mills of several BHP products, including Jimblebar fines. China has continued to press miners for better terms on iron ore purchases.

BHP and Baowu already work together on efforts to cut emissions from steelmaking. Commercial-scale trials completed in late 2024 showed BHP’s Pilbara ores could be blended into feed for direct reduced iron production at Baowu’s Zhanjiang Steel operation in China.

Baowu also has a substantial investment alongside Rio Tinto (LSE, ASX, NYSE: RIO) in Western Australia. The companies formed a 54%-46% joint venture in 2022 to develop the US$2-billion Western Range mine in the Pilbara. The 25-million-tonne-a-year operation began production in 2025.

Strategic supply

A Jimblebar purchase would put the world’s largest steelmaker directly into the ownership of one of BHP’s established Pilbara operations while leaving BHP firmly in control.

Such a sale would also differ from the industry’s more common practice of bringing partners into new developments to share construction risk. Jimblebar is a mature operation, a distinction Reuters noted could complicate the strategic case for BHP to sell down its interest.

For Baowu, however, an equity position would deepen its exposure to Australian iron ore at a time when China remains the dominant market for the Pilbara’s production. Any transaction would still face the political and regulatory sensitivities surrounding major Chinese investments in Australian resources.