Australian mining giant BHP Billiton has announced that it and its joint venture partners, namely Itochu Minerals & Energy of Australia Pty Ltd, Mitsui-Itochu Iron Pty Ltd, Mitsui Iron Ore Corporation Pty Ltd., have concluded a long-term iron ore supply agreement with China's leading steelmaker Baoshan Iron & Steel Co., Ltd. (Baosteel) for the procurement of an additional 94 million mt of iron ore.
Under the terms of the new contract, Baosteel will be supplied with 10 million mt of iron ore per annum for 10 years at a price to be mutually agreed each year. The price of the iron ore during the term of the agreement shall be determined based on the annual contract negotiations held between Chinese steelmakers and global iron ore suppliers.
Commenting on the agreement, BHP Billiton President Marketing, Tom Schutte, said, "Baosteel plays a significant role in China's steelmaking industry. We are absolutely delighted to be able to support Baosteel's future development by guaranteeing a stable and predictable supply of iron ore. We are doing this through substantial investment in the expansion of our mine, rail and port operations in Western Australia, with planned installed production capacity of 300 million mt per annum by 2015."
BHP Billiton and Baosteel also entered into an agreement in 2005 that focuses on technical research in iron ore and steelmaking raw materials.