World leading iron ore provider BHP Billiton announced Wednesday
it had signed a 10-year deal to supply China's Baoshan Iron and
Steel Co. (Baosteel) with an additional 94 million tons of iron
ore.
The Anglo-Australia miner will supply 10 million tons of iron
ore annually to China's largest steel producer, up from 6 million
tons under previous long-term supply arrangements, the two said in
separate statements.
The first shipment under the new contract is scheduled for
April. The ore will be supplied "at a price to be mutually agreed
each year", they said.
"This is a significant quantity of iron ore and highlights our
interest in keeping pace with high demand in China during a time
when supply is tight," Tommy Schutte, BHP Billiton president of
marketing and supply, said.
"We are doing this through substantial investment in the
expansion of our mine, rail and port operations in Western
Australia, with planned installed production capacity of 300
million tons per year by 2015," he said.
Dai Zhihao, Baosteel Group vice president, said, "The new supply
highlights our optimism about the long-term prospects for the steel
industry in China."
The long-term contract helps to guarantee resources, but it is
hard to say how it would affect the on-going negotiation for the
2008 iron ore price, Zhang Jingang, vice secretary-general of China
Iron and Steel Association (CISA), said.
On behalf of Chinese steelmakers, Baosteel is negotiating with
major iron ore providers, including BHP Billiton, Rio Tinto and
CVRD, the iron ore price for 2008.
Luo Bingsheng, CISA's vice chairman, told reporters on Wednesday
that there was still a big divergence between the major buyers and
sellers.
There were several positive factors for the Chinese side, Luo
said. China's iron ore output was increasing rapidly and demand
from the nation's steel makers was expected to fall in the next few
years as they closed obsolete facilities, he added.
China is expected to eliminate 100 million tons of iron
production capacity and 55 million tons of steel production
capacity from 2006 to 2010, Luo noted.
In late 2006, Chinese steel makers agreed with major iron ore
providers on a 9.5-percent price rise for iron ore imports for
2007. The lower-than-expected increase was deemed a success for
Chinese buyers.
China, the world's largest steel producer and consumer, imported
383 million tons of iron ore in 2007, up 17.4 percent from 2006,
according to statistics from China Customs.
(Xinhua News Agency January 31, 2008)
