Wuhan Iron & Steel Group Corp (Wisco), China’s third largest steel producer, has secured a long-term iron ore supply contract with Corp Venezolana de Guayana (CVG).
Wisco will buy the iron ore at ‘China prices,’ which will differ from the benchmark rates set yearly by the world’s largest three iron ore suppliers.
China and the three ore giants are now in negotiations over long-term ore contracts for 2010. Last year’s talks broke up, as Chinese mills regarded a 33% price cut, which Japanese and South Korean steelworks agreed on, as too small.
CVG is the only iron ore producer in Venezuela which has 14.66bnt of iron ore resources with grading on a par with Brazilian ore. The miner has a production capacity of 23Mt/y. Wisco said that it also has a priority purchase with CVG, giving it the option to buy more of CVG’s ore if CVG expands its capacity.
In July, Wisco became the biggest shareholder of Canadian iron ore miner CLM, and was later in October approved to buy into Australian CXM. With its joint-venture mining project with WPG now under examination by the Australian authorities, the steel producer has offered to buy a stake in Brazil’s MMX Mineracao e Metalicos for $400M.
China imported approximately 469.4Mt of iron ore in the Jan-Sep period, of which 1.95Mt came from Venezuela. Of its 443Mt imports in 2008, 3.2Mt came from Venezuela.
Source China Metals e-mail email@example.com