logo-loader
viewFortescue Metals Group

Fortescue Metals secures iron ore contract with Baosteel and CISA

australia_and_new_zealand350_4a88fffc411c7.jpg

Fortescue Metals (ASX: FMG) has reported an agreement with Baosteel Group Corporation (Baosteel) and China Iron and Steel Association (CISA) for an agreed China price for all Fortescue iron ore sold to Chinese mills for the period July 1 to December 31, 2009.

The agreement, signed by Baosteel and CISA, commits Chinese steel mills to acquire approximately 20 million wet metric tonnes from Fortescue for the period between 1 July and 31 December 2009.

The agreed price is US$0.94 / dry metric tonne unit (“dmtu”) for Fortescue’s Rocket Fines (on an FOB basis) and is around 3% under the price agreed by other Australian producers with non Chinese Steel mills.

This price equates to approximately US$55.50 per dry tonne for Fortescue grade iron ore. Fortescue has also agreed a lump price of US$1.00/dmtu for high grade lump which is equivalent to approximately US$61 per dry tonne FOB.

In return, Chinese steel mills will provide finance to Fortescue of US$5.5 billion to US$6 billion.

Fortescue CEO Andrew Forrest said, “the agreement eliminates that price uncertainty, sets a solid platform for Fortescue to deliver increased product into China and affirms our close working relationship with CISA and all Chinese steel mills.”

Fortescue said that while the price of steel in China has nearly doubled over the past three months, it has fallen by 20% over the past 10 days alone, reflecting the continued volatility in the industry.

Quick facts: Fortescue Metals Group

Price: 9.06 AUD

ASX:FMG
Market: ASX
Market Cap: $27.9 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Stobart Group PLC reports ' strong strategic and operational first-half...

Stobart Group (LON:STOB) CEO Warwick Brady and CFO Lewis Girdwood highlight what they believe to be the 'significant growth potential' within its aviation division and in particular at London Southend airport. Passenger numbers at the airport increased by 41.8% to 1.2 million in the six...

1 day, 20 hours ago

2 min read