Foreign Correspondence

[Amaunet]

BHP gears up iron ore supply to China

www.chinaview.cn 2004-09-30 10:14:50

BEIJING, Sept. 30 (Xinhuanet) -- BHP Billiton Ltd., one of the world’s biggest miner, has agreed to sell an extra US$3.2 billion of iron ore to four Chinese steel makers, the Australian company has announced.

According to the announcement, Wuhan Iron and Steel (Group) Co., Ma’anshan Iron and Steel Co., Jiangsu Shagang Group and Tangshan Iron and Steel Co. will buy 12 million tons of ore each year from the Melbourne-based miner.

In March, BHP and the four Chinese steel makers agreed to form a joint venture in Australia, covering a sub-lease at a mine in the western part of the Oceanic country. Meanwhile, the four Chinese steel makers had also agreed to buy US$9 billion of ore over 25 years.

The move reflects the value of the company’s relationship with its Chinese customers, Graeme Hunt, president of BHP Billiton Iron Ore, said after formally signing the agreement.

“While this relationship has been some time in the making — we’ve been talking to the mills involved for a number of years now — from the time the agreement was reached in principle we’ve been able to develop the relationship further,” Hunt said.

“As these steel mills continue to lead China’s industrial development we are continuing to take the steps to make sure they can count on us for their iron ore, firstly to 110 million tons per annum by the end of this year and subsequently towards 145 million tons beyond that.”

Analysts said BHP’s move mirrored efforts by its archrival Rio Tinto Plc. to expand iron ore mine to meet China’s growing demand for the steel-making commodity.

Last month, Rio Tinto signed a supply contract with China’s Baosteel for an extra seven million tons of iron core each year, increasing the total annul supply to 20 million tons.

China has been looking around the world to secure iron ore supplies to fuel its booming economy.

The country’s steel production was expected to grow nearly 18 percent to 290 million tons in 2005, an Australia-based research center forecasted earlier this week.

China has recently overtaken Japan as the world’s biggest importer of iron ore and now accounts for around one third of the world’s sea-borne iron ore trade.

Global steel output rose 8.5 percent in the first eight months of this year, led by a 21 percent jump in China, according to the International Iron and Steel Institute.

(Shenzhen Daily-Agencies)




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