Brazilian mining company Companhia Vale do Rio Doce (Vale) has announced the signing of a new long-term contract with Anglo-Dutch steel producer Corus UK Ltd (Corus) for the supply of iron ore to its plants in Europe.
Under this long-term contract, which Vale claims is one of the largest-ever iron ore deals signed between a steel company and an iron ore supplier, the Brazilian giant will supply approximately 63 million mt of iron ore to Corus´s plants over the next five years.
According to Vale, this contract is aligned with the desire of both Vale and Corus to further strengthen their relationship that started in 1942, the year of Vale's foundation.
Vale has not, however, provided a value for the contract.
Vale has stated that the deal highlights its unique capability as a long-term reliable supplier of high quality iron ore, given its large-scale operations and excellence.
The deal has arrived at a time of uncertainty in the mining and steel sectors, when the Brazilian company is seeking a further rise in its iron ore prices from its Asian customers which pay lower prices than their European rivals.
However, an official from the China Iron & Steel Association (CISA) lately declared that due to the considerable drop in prices in China's steel markets and given the high costs of the steel mills, many Chinese producers find themselves in difficult financial circumstances, and some are reducing production or have stopped production altogether. Therefore, he stated, another iron ore price rise would cause steel mills to register further losses and so Chinese steel producers would never accept the price hike sought by Vale.