July 24th (Business Spectator) –

Global miner Rio Tinto Ltd looks set to secure another 1.5 million tonnes of iron ore annually, after the company announced it had agreed on the commercial terms of a proposed deal with Iron Ore Holdings (IOR).

Once a feasibility study was done on the new mine, Rio Tinto would purchase the ore from IOR, it said in a statement.

“This enables IOH to develop a small resource that would face large capital costs on a stand-alone basis and most likely remain undeveloped,” said chief executive of iron ore Sam Walsh.

The extra iron ore is unlikely to directly bolster Rio’s earnings as the miner will be paying a premium compared to the iron ore from its own operations. However, the agreement does provide Rio with extra stockpile’s to increase volume and deal with production interruptions.

Rio Tinto is trying to fend off a hostile takeover from rival miner BHP Billiton Ltd.

A key theme in the arguments proffered by Rio against the merger are its allegedly superior iron ore operations, which it claims are not adequately valued by BHP Billiton’s 3.4 share-swap offer.

Recently, BHP matched a record increase in iron ore price contracts with its Chinese customer Baosteel, announcing a 96.5 per cent increase for iron ore lumps.

IOR shares emerged from a trading halt to rocket 20.17 per cent on the announcement, trading at 68.5 cents per share at 1246 AEST, while Rio shares declined 3 per cent to $116.24.

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July 17th (Steel Guru) – It is reported that MMK has signed a strategic partnership memorandum with the Czech Company ALTA for the Prioskolsky Mining and Processing Plant Project

Mr Victor Rashnikov chairman of OJSC MMK Board of Directors and Mr Vladimir Plašil chairman of the Board of Directors of ALTA signed the Memorandum on Strategic Partnership aimed at organizing mutually advantageous cooperation and coordination of the parties’ actions for the implementation of the Prioskolsky Mining and Processing Plant in the Belgorod Region of the Russian Federation.

According to the Memorandum, ALTA will be the general contractor for the construction of the Prioskolsky GOK and will propose a scheme for the project’s financing. ALTA already has positive experience in the implementation of similar projects in the mining and other industries with the use of long-term financing on preferential conditions.

Alongside the Memorandum, a EUR 200 million framework contract was signed for ALTA’s delivery of process equipment and services for preparatory work and stripping at the Prioskolsky Iron Ore Deposit.

Mr Rashnikov said that “The selection of a strategic partner for the construction of the Prioskolsky GOK is another step in the consistent implementation of OJSC MMK’s strategy aimed at expanding our Company’s own raw materials supply base.”

When completed, the Belgorod Region project will allow MMK to cover its needs for iron ore materials for a period of over 60 years. It is expected that the construction of the plant’s infrastructure will start as soon as 2009, with the first ore expected to be mined in 2012. In 2016 the plant is scheduled to reach its design capacity of 25 million tonnes of iron ore, which, coupled with output from the local Magnitogorsk mine, will meet 80% of MMK’s requirement for this kind of raw materials.

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.

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.

May 26 (Steel Guru) – It is reported that the merger of Sponge Iron India Limited with National Mineral Development Corporation will ensure supply of desired quality and quantity of iron ore to SIIL’s plant in Andhra Pradesh.

Mr VK Uppal CMD of SIIL said that it has been facing acute raw material shortage for a couple of years as the private firms in Karnataka that sell iron ore demand 100% advance and without bills. He added that it is difficult for a public sector firm like SIIL to obtain the raw material under such conditions.

Mr Uppal said that the merger of the company with NMDC would ensure desired supply of the raw material to the company’s plant in Khammam district. He added that the merger would pave the way for implementation of the proposed sponge iron plant expansion at Paloncha by utilizing surplus land and manpower of SIIL and financial resources available with NMDC.

It may be noted that the union cabinet has approved the merger of the two PSUs under the ministry of steel in its meeting recently. The merger would be carried out within 6 months through acquisition of SIIL shares by NMDC in the public interest.