CVRD discloses iron ore prices for 2005

CVRD discloses iron ore prices for 2005

The world's largest iron ore producer, Brazil's Companhia Vale do Rio Doce (CVRD), announced that it concluded 2005 iron ore price negotiations with Nippon Steel Corporation (NSC), Japan's largest steelmaker. The two parties agreed on a 71.5% increase in ore prices from 2004; CVRD had been seeking a 90% increase in the prices. Although not disclosed officially, the new price for Southern System Fines (SSF), FOB Tubarao, Brazil, is US 55.34 cents per Metric Ton Fe unit. The new price for the Carajas Fines (SFCJ), FOB Ponta da Madeira, Brazil, is 56.18 cents per Metric Ton Fe unit. BHP Billiton and Rio Tinto are expected to raise their prices accordingly. CVRD claims that disequilibria in the global metals and maritime freight markets justify their price increase. Furthermore, CVRD argues that its continuing investments, despite rising investment costs in the production and shipment of iron ore, have also necessitated the increase. For 2005, CVRD budgeted US$ 1.7 billion for investments in ferrous minerals. Currently, CVRD is developing six projects aimed at expanding the company's iron ore production capacity. These projects will come on stream between 2005 and 2007