Anglo-Australian giant BHP Billiton (BHP-N) has inked a US$9-billion deal to annually ship some 12 million tonnes of iron ore to four of China’s leading steel mills.
The 25-year deal is BHP’s largest ever commercial agreement with Chinese steel mills.
Under the Wheelarra joint venture, Wuhan Iron and Steel, Maanshan Iron and Steel, Jiangsu Shagang Group, and Tangshan Iron and Steel will take a 40% interest in a sub-lease over BHP Billiton’s Jimblebar mine, near Newman in Western Australia. BHP will retain a 51% stake, with its longstanding Japanese joint venture partners CI Minerals Australia and Mitsui Iron Ore taking 4.8% and 4.2% interest, respectively.
During the six months ended Dec. 31, Jimblebar produced 3.1 million tonnes of iron ore, up from 2.6 million tonnes in the year-earlier period. The operation is currently targeting the Wheelarra Hill 4 deposit. The ore is blended with ore from Mount Whaleback and satellite orebodies to produce the Mount Newman blend.
At the end of June 2003, Jimblebar’s proven and probable reserves stood at 247 million tonnes running 61.8% iron, with 175 million of those tonnes (running 62% iron) in the proven category.
With primary and secondary crushing capacity of 8 million tonnes per year, reserves from the Wheelarra Hill 4 are sufficient to for about 14 years. Other significant deposits are available for blending over the 23-year life of the Mount Whaleback deposit.
Subject to formalization of the plan in Australia, BHP Billiton, the world’s biggest diversified miner, plans to immediately begin shipping an additional 4-6 million tonnes of iron ore to the Chinese mills, approximately doubling its total sales to its Chinese customers in 2004.
“The Wheelarra joint venture will underpin a major export agreement between China and Australia and will cement an ongoing economic partnership between BHP Billiton as a leading supplier of raw materials and China as a major industrial nation” said BHP CEO Chip Goodyear.
BHP Billiton recently reported a net profit of US$1.34 billion for the six months ended Dec. 31, up from US$912 million during the year-earlier period. Sales increased 36.2% to US$11 billion. Sales to China during the period amounted to 10% of its total turnover, compared with 5% a year earlier.
The company also said Western Australian iron ore production totalled a record 44.9 million tonnes with shipments coming to a record 44 million tonnes driven by strong demand in all Asian markets, particularly China.
Be the first to comment on "BHP signs Chinese steel deal"