17 Nov 2009 04:40

WISCO signs long-term iron ore contract with CVG

Shanghai. November 16. INTERFAX-CHINA - Venezuela-based iron ore miner Corporacion Venezolana de Guayana (CVG) has agreed to sell iron ore to Wuhan Iron and Steel Group Corp. (WISCO) at the same annual contracted price that China negotiates with other major global iron ore miners in the future, WISCO announced on Nov. 16.

"In 2010, CVG will sell us iron ore at the China price," Bai Fang, an employee from WISCO told Interfax, though he refused to disclose other details about the agreement. Several other Chinese companies have since signed agreements with CVG.

CVG is the only iron ore producer in Venezuela, which has 14.66 billion tons of iron ore resources with grading on par with that of Brazilian iron ore, according to the announcement. Under the deal, WISCO has the option to buy more of CVG's iron ore output if CVG expands its annual production capacity beyond its current level of 23 million tons.

So far this year, the China Iron and Steel Association (CISA) has only negotiated a long-term iron ore price with Fortescue Metals Group Ltd. (FMG), Australia's third-largest iron ore miner. CISA has refused to accept the long-term prices that steel mills in South Korea and Japan had negotiated with the three global iron ore giants Rio Tinto, BHP Billiton and Vale.