Bluescope Steel has agreed a US$150/t price for iron ore pellet supply with fellow Australian group Grange Resources.
The pellets will be delivered from Grange’s Port Latta facility during the quarter commencing 1 July 2010.
Unlike most iron ore sales contract years which run from April - March, the contract year for Grange sales to BlueScope operates from July - June. Grange is contracted to provide BlueScope with 800kt/y of blast furnace pellets until 30 June 2012.
The interim price represents an increase of 107% on the previous annual iron ore pellet benchmark price.
Grange CEO, Russell Clark, said that the increased interim pricing arrangement recognises the rise in spot iron ore prices since March 2010.
He said: “In addition to agreeing an interim price, we are also discussing a new pricing mechanism with BlueScope that would operate for the remaining two years of our current contract.”
Grange said that since the end of the annual iron ore benchmark pricing methodology, it had been negotiating with its two major customers, Shagang and BlueScope, to secure ongoing pricing arrangements based on the new iron index methodology.
Grange produces about 2.3Mt/y of iron ore pellets.