At the end of June this year, Venezuela sent a delegation to China to carry out negotiations regarding iron ore contracts with Hubei Province-based Chinese steelmaker Wuhan Iron and Steel Co. (WISCO). The WISCO and Venezuelan representatives have lately reached agreement on contract iron ore prices for the whole of 2010. Compared with the iron ore price Japan and South Korea contracted with Vale, the price agreed by WISCO and Venezuela is $20 lower. This means that WISCO could save up to RMB 400 million (about $59 million) by importing iron ore from Venezuela in 2010.
Compared with Brazilian iron ore, Venezuela's iron ore is of a high grade. In October 2009, International Economic and Trading Corporation, a subsidiary of WISCO signed a seven-year contract with the CVG mining company of Venezuela, for a total volume of 40 million mt of iron ore. In December 2009, WISCO received priority from CVG as regards iron ore purchases.
The Venezuelan contract reduces the pressure on WISCO from the three main mining giants - Vale, BHP Billiton and Rio Tinto - and also eases the pressure on the Brazilian ship route.