Baosteel Says May Buy More Iron Ore From Fortescue (Update1)

May 29, 2008

May 29 (Bloomberg) – Baosteel Group Corp., China’s biggest steelmaker, may buy as much as 20 million metric tons of iron ore a year from Fortescue Metals Group Ltd.

The possible increase will follow Fortescue’s expansion plan, Baosteel Resources Co. President Li Qingyu said at a ceremony in Shanghai.

“We will have larger cooperation with Chinese steelmakers in future, such as shipping and logistics,” Fortescue’s Executive Director Russell Scrimshaw said in an interview today in Shanghai.

Baosteel and other Chinese steelmakers are backing Fortescue to reduce reliance on iron ore shipped by BHP Billiton Ltd. and Rio Tinto Group. Iron-ore prices have surged for six years to a record on demand from China.

The Australian company has inked long-term contracts with 33 Chinese mills for at least 10 years, Scrimshaw said.

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