Australia’s mining giants are aiding China’s push to internationalise its currency and reduce the dominance of the US dollar, as they gradually shift towards using the yuan for financing and settlements, analysts said.

China has been using its heft as the world’s dominant iron ore buyer to push global mining companies to adopt the yuan. And several firms are already making the switch, with China’s relatively low interest rates becoming an added incentive.

BHP, the world’s largest mining company, became the latest firm to start using a yuan-based spot index to price some of its iron ore products last month, after concluding a deal with the China Mineral Resources Group.

And the firm’s chief financial officer, Vandita Pant, said on the sidelines of the Macquarie Australia Conference last week that the firm was open to issuing bonds in yuan in the future.

Other firms have made similar moves. Rio Tinto, the British-Australian mining behemoth, signed its first yuan-denominated iron ore spot contract as far back as 2019. A year later, it completed the industry’s first fully paperless yuan settlement with China’s Baoshan Iron & Steel using blockchain technology.

Last year, fellow mining giant Fortescue made headlines when it borrowed 14.2 billion yuan (US$2.1 billion) from two Chinese state-run banks. The loan, priced at a fixed interest rate of 3.8 per cent per annum, was the first yuan-denominated syndicated term facility of its kind ever agreed by an Australian corporation.

John Welborn, chairman of Fenix Resources, a smaller iron ore producer, said earlier in May that his company would be “very enthusiastic” to secure low-cost Chinese debt – denominated in yuan – if it could be matched with yuan-priced commodities, as “that would make logical sense”.