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Deal to sell new mine output to Chinese
Source: Xinhua |
November 14, 2009, Saturday
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Print Edition
Print Edition
AN Australian iron ore producer announced yesterday that it had sold the expected first five years of production from a new mine to Chinese customers.
Centrex Metals Ltd announced it had signed a five-year sales agreement for its Wilgerup project in South Australia with Shenyang Orient Iron & Steel (Group) Co Ltd plus a one-year extension option for 1 million tons of hematite per annum (Mtpa).
The deal follows Centrex's sales pact with its second-largest shareholder, Baotou Iron & Steel (Group) Co Ltd, for the remainder of ore produced at the 1.6 Mtpa mine.
The mine is expected to start production around October next year.
Baotou, China's 10th largest steel company by output in 2008, has an 8.13 percent stake in Centrex while Shenyang, a privately owned, medium-sized steel producer, owns 5.57 percent.
The pricing for both deals will be based on Rio Tinto Ltd's benchmark for iron ore it produces at its Hamersley operations in Western Australia's Pilbara region.
However, Centrex said there would be pricing flexibility "should the pricing mechanism be replaced."
Centrex Managing Director Gerard Anderson has joined a growing number of iron ore sector players, including executives of BHP Billiton Ltd, who believe the key pricing system's days are numbered.
Price negotiations dragged on longer than ever before this year as major iron ore producers resisted calls by Chinese steel mills for deep price cuts.
Centrex Metals Ltd announced it had signed a five-year sales agreement for its Wilgerup project in South Australia with Shenyang Orient Iron & Steel (Group) Co Ltd plus a one-year extension option for 1 million tons of hematite per annum (Mtpa).
The deal follows Centrex's sales pact with its second-largest shareholder, Baotou Iron & Steel (Group) Co Ltd, for the remainder of ore produced at the 1.6 Mtpa mine.
The mine is expected to start production around October next year.
Baotou, China's 10th largest steel company by output in 2008, has an 8.13 percent stake in Centrex while Shenyang, a privately owned, medium-sized steel producer, owns 5.57 percent.
The pricing for both deals will be based on Rio Tinto Ltd's benchmark for iron ore it produces at its Hamersley operations in Western Australia's Pilbara region.
However, Centrex said there would be pricing flexibility "should the pricing mechanism be replaced."
Centrex Managing Director Gerard Anderson has joined a growing number of iron ore sector players, including executives of BHP Billiton Ltd, who believe the key pricing system's days are numbered.
Price negotiations dragged on longer than ever before this year as major iron ore producers resisted calls by Chinese steel mills for deep price cuts.
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