Fortescue Metals Supports Internationalization of China’s Yuan
Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron ore producer, said it welcomes policies that promote the use of China’s yuan in global trade, following a report Australia was set to sign a conversion deal.
“Fortescue welcomes the ongoing internationalization of the yuan, which is becoming an increasingly important currency in global trade,” the Perth-based company said today in response to a Bloomberg request for comment. “We also support policies that deepen Australia’s engagement with our largest trading partner.”
Prime Minister Julia Gillard may seek a deal enabling direct conversion of Australian dollars into Chinese currency when she visits China next week, the Australian newspaper reported yesterday. Currently companies exporting goods to China have to convert the Australian dollar into U.S. currency or yen, and then into yuan, incurring extra charges.
During fiscal 2012, 97 percent of Fortescue’s iron ore sales came from China, the biggest importer of the steelmaking raw material. BHP Billiton Ltd. (BHP), the world’s biggest miner and Australia’s second-biggest iron ore exporter, declined to comment ahead of a deal being announced, according to an e-mail.
Gillard will attend the Boao Forum, which runs from April 6 to April 8, and visit cities including Shanghai and Beijing, the Australian newspaper reported, without saying where it got the information. Darrin Barnett, a spokesman for the prime minister, confirmed Gillard would attend the forum, declining to comment on the currency conversion deal or full itinerary.
China remained Australia’s top trading partner in January, even as transactions slid to A$9.9 billion ($10 billion), the lowest since September, according to figures from the government’s statistics bureau. Australia’s business sector has been seeking a deal for some time and a pact will help reduce costs, said Arthur Sinodinos, shadow parliamentary secretary to the leader of the opposition, according to the Australian Broadcasting Corp. website.
The Australian dollar closed at $1.0419 in Sydney on March 29. It rose 1.8 percent last year against the greenback. The so- called Aussie has surged as demand for the nation’s resources from China and India set off a record mining boom.
Internationalization of the yuan, China’s currency, is in the interests of Australian businesses and the nation’s economy, Treasurer Wayne Swan said in July. Japan last year started to use its currency in direct trading with China.
The central banks of China and Australia signed a A$30 billion currency swap agreement to ensure the availability of capital between the trading partners, the Reserve Bank of Australia said in March 2012.
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