China's biggest steelmaker is considering acquiring up to a quarter of BHP's Jimblebar iron ore mine in Western Australia, just months after securing control of the consortium operating half of Guinea's massive Simandou project.

China Baowu Steel Group is examining a possible acquisition of between 15 per cent and 25 per cent of the Jimblebar mine, two people briefed on the matter told Reuters.

No offer has been announced, and neither company has confirmed that negotiations are under way. Baowu has not yet made a final investment decision, and there is no certainty that the expression of interest will lead to an actual transaction.

In response to market rumours, BHP stated that "the company has a long history of partnerships across its asset base and regularly explores options that could generate long-term value for shareholders," adding that "WAIO [Western Australia Iron Ore] is core to our portfolio and we remain firmly committed to WAIO and the development of Western Australia." China Baowu did not respond to Reuters' request for comment.

The potential deal has a significant African intersection. Baowu Resources, the steelmaker's mining subsidiary, increased its ownership of Winning Consortium Simandou from 49 per cent to 51 per cent in January, giving it control of the consortium operating Blocks 1 and 2, the northern half of Guinea's four-block Simandou development.

The full Simandou development is expected to produce as much as 120 million tonnes annually when it reaches capacity.

A Jimblebar investment would give Baowu exposure to an established Australian mine that produced approximately 62.5 million tonnes of iron ore during BHP's 2026 financial year. BHP holds an 85 per cent interest in the mine, with Japan's Itochu (8 per cent) and Mitsui (7 per cent) holding the remaining 15 per cent. Any stake acquired by Baowu would come from BHP's holding, according to Reuters.

A 15 per cent sale would reduce BHP's interest to 70 per cent, while a 25 per cent transaction would leave it with 60 per cent.

By comparison, Simandou has only recently entered commercial production after decades of delays, ownership changes and the construction of an entirely new railway and port system. Its ore averages about 65 per cent iron content, compared with lower grades found in some established mining regions. Simandou's first export cargo left Guinea in late 2025, and shipments have since increased, although the project remains well below its planned full capacity.

The potential investment would give the world's biggest steelmaker exposure to major iron ore production in both Africa and Australia. China produces more steel than the rest of the world combined but depends heavily on imported iron ore, particularly from Australia and Brazil, leaving it exposed to prices and supply decisions made by a relatively small number of international miners.

Simandou is intended to provide another major source and has become central to Guinea's development ambitions and China's effort to diversify its mineral supply.

Baowu already has experience investing alongside Australian mining groups. It formed an iron ore joint venture with Rio Tinto in Western Australia in 2022. An Australian investment would not diminish Baowu's existing responsibilities at Simandou, and there is no evidence that the company intends to redirect money or management attention away from Guinea.

The transaction is expected to be subject to Australian foreign investment review. Under current Australian rules, foreign government investors acquiring a 10 per cent or greater interest in a mining entity are generally required to notify and obtain approval from the Treasurer.

In recent years, Australia has tightened scrutiny of Chinese investments based on national security considerations, particularly in critical minerals such as lithium and rare earths. While iron ore is in a different category from lithium and rare earths, the review logic is comparable.

Approval by Australia's Foreign Investment Review Board (FIRB) carries uncertainty, and the transaction could be blocked or subjected to stringent conditions.

No specific valuation or price range for a 15–25 per cent stake has been disclosed. When the Jimblebar mine commenced production in 2014, BHP disclosed its share of project investment at approximately US$3.2 billion, though this was construction capex and not a current asset valuation.

"The company has a long history of partnerships across its asset base and regularly explores options that could generate long-term value for shareholders," BHP said, without confirming or denying the Baowu talks.