Fortescue in $12bn deal

Shares in Fortescue Metals Group Ltd inched closer to the $40 mark after a deal with China's Tangshan Iron and Steel Group. The 10-year deal with Tangshan, China's thirdlargest steel mill, could be worth as much as $US10 billion ($A12.14 billion) to Fortescue. Tangshan has committed to buy five million tonnes of ore a year from Fortescue's Chichester Range mine in the Pilbara then at least 15 million tonnes annually of Fortescue's planned expanded production.

Source : Warrnambool Standard, Friday 18/5/2007

Do you know?

China is the biggest country that consumes the iron ore. This country imported more than 200 Mt and more than 300 Mt iron ore in 2004 and 2006. The imported ore and local ore were used to make more than 200 Million tones and more than 300 Million tones crude steel in 2004 and 2006. Last year China consumes more than 30 % of world traded iron ore. The iron ore was imported from Australia and Brazil, the two big countries that has big iron reserves. China steel intensity was 280 kg/capita. It is predicted increase again in 2007.

What are Iron Ores ?

Iron ores are natural minerals for making steel. This minerals characterized by iron oxide existence. Their colors vary from dark grey to rusty and depend on the quantity and form of iron oxide. Usually iron oxide exists in rock in form of hematite, magnetite and iron hydroxide. Other oxides in rock are silica (SiO2), alumina (Al2O3) and Phosphate (P). Theses oxides must be in low quantity for making steel.

Iron Ore Price

Since several years ago, iron ore price has risen significantly. It was due to high demand in Chinese market. China Daily said the price rise 9.5 % on April 2007. Last year Rio Tinto announced the prices of Hammersley Iron are US $ 0.8042 per dry metric tonne unit for fines and US $ 1.0264 per dry metric tonne unit for lump. CVRD announced that the prices of its iron are 91.11 USD cents/Fe units for lump and 114.42 USD cents/Fe units for Blast Furnace Pellets. Will the price rise again next year?