Fortescue signs new iron ore deal with China
Australia's Fortescue Metals Group Ltd., which has plans to construct a new mine in Western Australia, has announced that it has signed a contract to supply iron ore to a second Chinese steelmaker for a period of 20 years. Earlier this year Fortescue announced that it signed its first long-term contract worth roughly A$1.3 billion ($950 million) with Hebei Wenfeng Iron & Steel Co. Ltd. to supply 2 million tons of iron ore per year. Fortescue will supply the Jiangsu Fengli Group, located near Shanghai with 9% of its production during high production periods and 4 million tons of iron ore per year once full production of 45 million tons of iron ore is achieved. Fortescue aims to complete its multi-billion dollar mine project in western Australia's Pilbara region in late 2006 or early 2007 and produce 35 million tons of iron ore in the first year and increase that figure up to 45 million tons in its second year of operations. Separately, according to recent news in the market, Fortescue has criticized fellow Anglo-Australian iron ore producer BHP Billiton for its claims that Japanese steelmakers should only cooperate with experienced low-cost suppliers or risk long term high prices, claiming that this practice could force smaller suppliers out of the market. BHP Billiton's director of marketing made the statement at the Australian-Japan Joint Business Conference in Melbourne.