large buyer takes big slice at dlrs11 a share, page-9

another steel mill hops onboard the fmg express Another steel mill hops onboard the FMG express

Chris Cann
Friday, 1 December 2006

MAJOR Chinese steel mill Wuhan Iron & Steel Group has signed up to take 4.4% of initial planned production from Fortescue Metals Group's Pilbara iron ore project up to a maximum of 2 million tonnes per annum for 10 years.



Andrew Forrest

The announcement follows the successful testing of Fortescue material at Wuhan's facilities.

The offtake agreement covers the range of Fortescue product including both high-grade lump, fines and super value fines ores, and takes into account sales of a further 5Mtpa if Fortescue produces more than the expected 45Mtpa.

Fortescue said both parties were looking at the agreement as a basis for a "mutually beneficial relationship over the longer term".

Wuhan produced 20Mt of steel in 2005, making it the 16th biggest steel manufacturer in the world and the third largest in China. The company expects to produce 30Mt in 2010.

Shares in Fortescue gained 1.5% or 16c to $10.92 early this afternoon.

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