Gindalbie strikes $71bn ore deal with AnsteelSarah-Jane Tasker...

Gindalbie strikes $71bn ore deal with Ansteel
Sarah-Jane Tasker From: The Australian March 31, 2010 12:00AM
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GINDALBIE Metals has finalised one of Australia's largest binding trade deals, a $US65 billion ($71bn) iron ore sales contract with its Chinese joint-venture partner, cementing the Mid-West region as a significant iron ore province.

Perth-based Gindalbie announced yesterday that it had finalised a long-term off-take contract with Ansteel for life-of-mine production from their $1.8bn Karara magnetite project in Western Australia.

The company said the off-take agreement was worth about $US580 million a year, increasing to more than $US2.1bn annually at its peak potential production rate.

Gindalbie managing director Garret Dixon said even on last year's prices it was a great project, but prices were expected to increase. "There is no doubt the price is going up and even if it moves to more regular renegotiations of price, we are OK with that," Mr Dixon said.

"We are piggy-backing off the BHP and Rio (price) . . . and then adjust it for our extra quality."


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BHP Billiton announced yesterday that it had agreed to short-term iron ore sales contracts with a significant number of customers in Asia, and Mr Dixon said the company would work off that.

"We support a move where the pricing is more transparent," he said. "We want it to be a long-term, stable business."

Mr Dixon said Ansteel was paying full market price for the iron ore.

"The pricing structure embedded in these contracts reflects the high quality and niche market position of magnetite concentrate in the global iron ore market," he said. "At the same time, it is apparent that iron ore demand is strong and it looks like there will be a healthy increase in iron ore prices this year."

The first shipment to China under the new off-take agreement is expected to occur in the second half of next year.

Mr Dixon said finalising the deal was a big tick for the Mid-West region.

"While we have all been talking about the Mid-West for a while as a new iron ore province, this is really the first major iron ore project and is the next big iron ore development by an Australian listed project," he said.

The project supports the Oakajee port development, which delivered a draft bankable feasibility study to the West Australian government yesterday.

Oakajee Port and Rail chief executive John Langoulant said the draft study would allow the state government to undertake due diligence to support its funding commitment.


NB THIS IS MY WORDING BELOW TAKEN FROM BROKERS REPORT
Iron Ore Projects and Infrastructure In Proximity of Magnetite Range SEE MAP PAGE 9 OF LATEST REPORT ON THE COMPANYS WEB SITE


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