MELBOURNE - Australian Prime Minister Anthony Albanese said on Wednesday he was concerned about a report that China's state iron-ore buyer had taken steps to pause purchases of iron-ore cargoes from miner BHP.

Bloomberg News, citing people familiar with the matter, reported on Tuesday that state-owned China Mineral Resources Group (CMRG) had asked the country's steelmakers and traders to pause purchases of BHP's dollar-denominated seaborne iron-ore cargoes during annual price negotiations.

"I am concerned about that and what we want to make sure is that markets operate properly," Albanese told reporters.

"We have seen those issues in the past. I want to see Australian iron ore to be able to be exported to China without hindrance."

CMRG has not responded to an emailed request for comment. A BHP spokesperson said on Tuesday the company does not comment on commercial negotiations.

Albanese said he hoped the issue would be resolved quickly and acknowledged differences could happen during price negotiations.

Australian Treasurer Jim Chalmers said he would set up a meeting with BHP CEO Mike Henry.

BHP's Australian-listed shares fell 1.13% in early morning trade. The miner is China's third-biggest iron ore supplier behind Rio Tinto and Brazil's Vale.

RBC Capital Markets analysts said in a note on Wednesday that Chinese steel mills could try to offset BHP's volumes by purchasing ore from Fortescue, Rio and Vale, though that could increase costs for the mills.

"If prolonged, the (pause) risks squeezing steel margins or forcing selective output cuts ... but China cannot realistically walk away from BHP supply altogether," the note said.

Iron ore is Australia's most valuable export product, though a government report in June said earnings from that could fall to A$105-billion ($69.39-billion) for the financial year ending in June 2026, from A$116-billion the prior year as global supplies increase.

China, the world's largest iron-ore consumer, buys about 75% of global seaborne iron ore and set up CMRG three years ago to buy ore on behalf of its steelmakers to gain more leverage as a large, single buyer.

Diplomatic ties between Australia and China have improved since the Albanese-led centre-left Labor party was elected in May 2022.

Relations had soured after the previous centre-right coalition government called for an international inquiry into the origins of the COVID-19 pandemic. China responded by imposing tariffs on several Australian commodities from late 2020, but they have since been lifted.