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FYI.... Iron ore price negotiations - FMG likely to be invited

http://www.steelguru.com/stt/index/neid/10#1

Iron ore price negotiations - FMG likely to be invited

- 08 Dec 2008

It is reported that Australian third largest iron ore supplier FMG lately signed a strategic cooperation agreement with China's Hunan Hualing Iron & Steel Group, with a view to resorting to Chinese market to ease the impact from the production trim and dull sale against the backdrop of global economic slowdown.

It is learned that with the dwindling demand and tumbling market, FMG's top leaders have made frequent visits to Chinese large steel makers recently, aiming to maintain stable ties with Chinese makers and its product marketing in China.

FMG has finished construction of its port, mines and railway in Apr this year for its prospecting work in Pilbara Area of Australia. It has discovered a deposit of 1.1 billion tonnes ore in less than 10% of the prospecting area of 40,000 square kilometer, including proved reserves of 120 million tonnes. Other two supplier giant, Rio Tinto and BHP Billiton, have a prospecting area of 11,000 square kilometer and 7000 square kilometer respectively.

FMG's output for 2008 is estimated to be 12 million tonnes and will reach 55 million tonnes in 2009 after the completion of the first-phase of CloudBread project. The second-phase of the project is under development and will likely upgrade the production to 100 million tonnes in 2010. BHP plans to scale up its production to 140 million tonnes to 150 million tonnes by 2010, and by that time FMG will become the world's fourth largest supplier, very close to BHP.

Analyst believed if FMG takes part in the talk, it will likely make some concession in pricing as it is its first attendance and it has to compete with BHP and Rio for market shares.

(Source: Shanghai Securities News)