Rewind to August, and the China Iron and Steel Association (CISA) was in all kinds of trouble.
Executives from Rio Tinto had been accused of spying (later retracted) and locked up, and CISA, the body responsible for fixing a price for China’s iron ore supply, was not getting anywhere in its negotiations with the big three miners, BHP Billiton, Vale and Rio Tinto.
The miners were offering to cut the price of China’s iron ore by 33 per cent, but CISA wanted a better deal, a 40 per cent reduction. Both sides were in deadlock and the pressure was rising by the day.
Then along came Fortescue, an upstart Australian mining company, which brilliantly offered to sell the Chinese 20 million wet tonnes of iron ore at a 3 per cent discount on what its rivals were offering.
Face was saved all round. CISA said it would now use the Fortescue deal as a "template" for its negotiations with the majors, although it was always difficult to see that gambit actually working.
Fortescue, meanwhile, was to be amply rewarded for its loyalty to China, in the form of $5.5 billion to $6 billion of Chinese financing to fund its expansion plans.
Speed up now to the present day, where there is still (!) no sign of a deal on the horizon between the mining companies and CISA. Instead, China has been buying iron ore on the spot market at vastly-inflated prices, to the chagrin of smaller steel companies, who are secretly striking their own deals and not exactly toeing the national line.
Now that CISA’s partnership with Fortescue has failed to pressure the majors into budging their price, the Australian miner has been dropped like a hot potato – today it pushed out a notice saying that its financing had not materialised after all.
You can almost hear the teeth gnashing in the one paragraph statement that the mining company looked forward to working with Baosteel and CISA in the future. And we’re back to square one.