IMO Railway's premium quality, low impurities ore alone could supply a client such a follows for +25 years.
UPDATE 1-Fortescue to expand iron ore sales to China's Valin Wed Feb 25, 2009 5:27am GMT
MELBOURNE, Feb 25 (Reuters) - Fortescue Metals Group Ltd (FMG.AX), Australia's third-biggest iron-ore miner, agreed to quadruple its iron ore sales to an arm of Chinese steel maker Hunan Valin Iron and Steel Group, now its second-largest shareholder.
Under the co-operation agreement, Fortescue said on Wednesday that, subject to mine expansions, it would increase its supply to up to 4 million tonnes a year to Valin subsidiary Xiangtan Steel from 2010 onwards, up from 1 million tonnes a year now.
The agreement follows a deal on Tuesday in which Valin agreed to pay A$1.2 billion ($770 million) for a 16.5 percent stake in Fortescue. For details: [ID:nSYD177686].
The group, which raised A$558 million with the sale of shares to Valin, launched a separate sale to institution investors to raise a further A$500 million, but left the door open to calling it off.
"We're still assessing whether to proceed," said Fortescue's spokesman, Cameron Morse.
Morse said the board would be looking at a number of factors, including the fact that it hopes to raise billions more through a sale of hybrid securities to China's sovereign wealth fund, China Investment Corp.
Any deal with the $200 billion fund is likely to come well after Valin's investment secures approvals from Australian and Chinese regulators.
Valin agreed to buy shares from Fortescue at A$2.48 a share, a 12 percent discount to Fortescue's close last Friday ahead of a trading halt. However the broader market has fallen since then, impacting bidding for the shares Fortescue is trying to sell to other investors.
The A$2.48 a share that Valin paid reflected its interest as a "strategic" investor, and institutions were likely to pay less, said one fund manager, who declined to be identified because the bidding process was subject to confidentiality agreements.
UMC Price at posting:
62.0¢ Sentiment: Hold Disclosure: Held
