Usiminas, MUSA amend iron ore supply deal

Tuesday, 05 December 2017 01:55:48 (GMT+3)   |   Sao Paulo
       

Brazilian flats steelmaker Usiminas, and MUSA, the company’s iron ore subsidiary, amended on Tuesday an existing iron ore supply deal, Usiminas said.

The steelmaker said the new contract additions “formalize” changes already approved at a company’s board meeting on August 24, 2017, including the reduction of the amount of iron ore Usiminas will purchase.

As previously reported by SteelOrbis, Usiminas will reduce the quantity of iron ore it buys from MUSA from 4 million mt per year to 2.3 million mt per year. The deal, with its approved contract additions, is valid until 2022, Usiminas said, when a new deal will be negotiated.

The amended deal also sets “minimum requisites” for MUSA to supply iron ore to Usiminas, “in line with the market’s practices,” Usiminas said, adding that those requisites make premium and penalty clauses “clearer,” also changing the way the iron ore is priced and then sold to Usiminas.

The contract additions also exclude the logistics costs Usiminas formerly incurred when receiving the commodity at its Cubatao mill, located in the city of same name in the state of Sao Paulo. Cubatao has not received iron ore from MUSA since early 2016.

Usiminas said the contract additions set “balanced” and “adequate” bases for both sides.

Usiminas said both parties have also signed a second deal, by which they set conditions for the supply of iron ore by MUSA to Usiminas between 2016 and 2017, dismissing Usiminas to pay the difference between the average iron ore volume forecasted in the original contract and the volumes actually purchased by the company in the two year period.


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