Russia’s Metalloinvest signs iron ore supply deals
July 9, 2008
July 9th (Reuters) – Metalloinvest, the Russian miner half-owned by billionaire Alisher Usmanov, said on Wednesday it has signed several new contracts to supply iron ore to leading iron and steel mills in Russia and Ukraine. Metalloinvest, which produces about 40 percent of Russia’s iron ore, said in a statement it would supply 100,000 tonnes a month of iron concentrate to Magnitogorsk Iron and Steel Works (MAGN.MM: Quote, Profile, Research) at an unspecified fixed price to the end of 2008.
The ore would be supplied by Metalloinvest subsidiary Lebedinsky GOK, Russia’s largest iron ore mine.
Benchmark iron ore prices have almost doubled this year after leading miners BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.AX: Quote, Profile, Research) (RIO.L: Quote, Profile, Research) each secured massive increases from their Chinese customers.
Metalloinvest has also agreed to supply iron producer Tulachermet with 130,000 tonnes a month — 50,000 tonnes of concentrate from Lebedinsky and 80,000 tonnes of pellets from its other mine, Mikhailovsky GOK.
This contract will run for three years, with prices fixed annually.
Metalloinvest said it would also supply 100,000 tonnes a month of concentrate from Lebedinsky to the Ilyich steel works in the Ukrainian port city of Mariupol. The three-year contract will also see prices fixed annually.
Metalloinvest already supplies iron ore to other Russian mills, including Novolipetsk Steel (NLMKq.L: Quote, Profile, Research) and Evraz Group’s (HK1q.L: Quote, Profile, Research) Zapsib plant, as well as exporting raw materials to ArcelorMittal (MTP.PA: Quote, Profile, Research) and U.S. Steel’s (X.N: Quote, Profile, Research) plant in Slovakia.
Russia is the world’s fifth-largest iron ore miner, with a 6 percent share of global production.