Fortescue Supports Yuan’s Internalization

The 3rd biggest iron-ore producer of Australia, Fortescue Metals Group Ltd. has stated that it welcomes the policies which promote usage of Yuan, the major currency of China in global trades, after a report came out stating that Australia is all set to sign a conversion deal. The company, through an official statement, mentioned that it supports the ongoing internalization of Yuan as its importance in global trades is vastly improving over the last few months. Through the statement, the company also added that they support policies which will deepen the engagement of Australia with the largest trading partner of it – China.

According to recent news report published in an Australian newspaper, Julia Gillard; the Australian Prime Minister is seeking a deal which will allow direct conversion of Australian Dollar into the Chines currency. The deal is expected to finalize when Gillard will visit China next week. As far as the current situation is concerned, companies have to convert the Australian Dollar into USD or Yen first and then that is converted to Yuan. This calls for extra charges for the exporters.

During the last fiscal year, 97% of all iron ore sales of Fortescue came from China, which is the biggest importer of the raw material used for steel making purposes. Incidentally, the biggest miner in the world and the 2nd biggest iron-ore exporter in Australia, BHP Billiton Ltd. has refrained making any comment on this possible deal, until it is finalized and some sort of formal announcement is made.

Gillard will be attending the Boao Forum between 6th and 8th April. She will also visit several cities such as Beijing and Shanghai. The spokesman for the Prime Minister, Darrin Barnett confirmed Gillard’s presence in the forum, however, he declined to make any comment on the possibility of the currency conversion deal.

As of data published of last January, China still stays the top trading partner of Australia. The transactions however slid down to $10 billion, the lowest since September, 2012. The data was released from the Statistics Bureau of the Australian Government. The business sector of Australia has been asking for a deal on currency conversion for some time and such a pact will definitely help reducing the costs, as stated by the shadow parliamentary secretary to the leader of the opposition, Arthur Sinodinos. Incidentally, on 29th March, Australian Dollar closed at $1.0419.