DJ Sahaviriya Group To Ink Iron Ore Deals With Rio, BHP, Vale

July 7, 2008

July 7th (Trading Markets) – Sahaviriya Group, a Thai steel maker, said it expects to sign iron ore purchase agreements with three major producers in the third quarter of this year to secure raw material supply for its planned THB90 billion ($1.5 billion) smelter.

Rio Tinto Ltd. (RIO.AU) and BHP Billiton Ltd. (BHP.AU) and Brazil’s Vale do Rio Doce (RIO) will supply a total of eight million tons of iron ore a year to Sahaviriya Iron & Steel Co. for at least seven years, the company’s acting president Win Viriyaprapaikit said Monday.

Australian iron ore producers will provide around 70% of the total, with the balance from Vale. The iron ore price will be negotiated on a year-on-year basis, Win said.

Sahaviriya Iron & Steel plans to build Thailand’s first smelter, with an annual capacity of 5 million tons a year.

The plant, which will take two years to build, is expected to start construction in the fourth quarter of this year, said Win.

The company also expects to sign seven year loan agreements with Chinese banks in the third quarter of this year.

It recently signed a THB50 billion agreement with Sino-International Heavy Industry Technology for the Chinese company to supply machinery and provide installation services for its planned smelter.

Over 15 years, Sahaviriya Iron & Steel plans to spend about THB500 billion to increase annual smelter production to 33 million tons

Under the agreement, Sino-International Heavy Industry Technology will also supply machinery and provide services for the smelter’s expansion at a cost of about $10 billion.

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