China's Guangdong Province-based privately-owned automobile manufacturer Shunde Rixin Development Co. Ltd. (Rixin Development), recent buyer of over 70 percent of the exploration rights to a 3 billion mt iron ore deposit in Chile, has signed an outline agreement on strategic cooperation with international logistics company COSCO Logistics for the transportation of its iron ore from Chile.
Rixin Development chairman Li Zihao has told SteelOrbis that the company finished all the legal formalities for the acquisition of the Chilean iron ore deposit in October 2009, thus obtaining control of three mines with total reserves of up to 5 billion mt. Mr. Li said that the total cost of the three mines in question amounted to RMB 13 billion ($1.9 billion), including the contract execution payment and taxes paid to the Chilean government. The payment will be made in installments, partly sponsored by the company's Hong Kong shareholders.
It is reported that China Minmetals Zhuhai Import and Export Trading Co., a subsidiary of China Minmetals Corporation, will help Rixin Development in its sales to the domestic iron ore market, while COSCO will be responsible for iron ore transportation, with China Communication Construction Co. to provide assistance in building railway, port and other facilities. According to China Minmetals, for the same grade ore, the FOB prices of this project will be 30 percent lower compared with the FOB prices of Vale to the Asian market this year.
"We plan to supply more than 30 million mt of iron ore to the Chinese market from year 2010 to 2012. After 2014, our annual supply will not be lower than 120 million mt," said Mr. Li.