A senior official at Chinese steelmaker Hunan Valin Iron & Steel Group Co. disclosed on May 19 that the company is currently in talks with Australia-based miner Fortescue Metals Group Ltd. (FMG) regarding iron ore supplies. Valin Group is negotiating for an increase in its annual iron ore supply from FMG to 6 million mt.
The senior official revealed that FMG has so far agreed to supply an annual volume of 5 million mt of iron ore to Valin Group from 2010, but did not mention any price. Previously, FMG and Valin Group had agreed on a supply volume of 4 million mt per year from 2010
Valin Group is the second largest shareholder of FMG with a 17.4 percent stake, with the largest stake held by Andrew Forrest, the CEO of FMG.
Meanwhile, FMG announced on May 19 that it has put two of its three expansion projects on hold due to the financial impact of the Australian government's proposed Resource Super Profits Tax (RSPT). The suspension of the two projects has little impact on iron ore supplies to Valin Group, though supplies could be affected if FMG suspends other projects.