I'm kind of wondering why you're paying 3500 c/u for ore. That's an insane price.
Aside from that, that piracy demand is harsh but reasonable. You could try to negotiate the price, and you should also consider that many pirates will charge a lot more from unarmored ships due to the incredible ease with which they can be killed.
Some traders think that they are saving money by not using an armor upgrade that takes 0.4% of their cargo space, but that is just comically wrong.