Brazil Vale in client talks to alter pricing model

Thu Oct 27, 2011

RIO DE JANEIRO Oct 27 (Reuters) - Giant Brazilian miner Vale said on Thursday it is in negotiations with its clients to change the pricing mechanism for its iron ore shipments.

Executive director Jose Carlos Martins said most clients in China are interested in moving toward a spot market model for pricing ore, and he expects increased volatility in prices of late to only support that trend in the future.

(sourced Reuters)

Rio Tinto negotiates Portugal iron ore deal -sources

Fri Oct 21, 2011

LISBON Oct 21 (Reuters) - Mining giant Rio Tinto is negotiating with Portugal's government for a concession to mine iron ore in the north of the country in an investment worth more than 1 billion euros, sources close to the talks said on Friday.

The investment in the mines of Torre de Moncorvo would represent a big boost for the country, which sorely needs foreign investment at a time of deep recession, as it cuts spending to meet budget goals under a 78 billion euro ($107 billion) bailout.

Two sources with knowledge of the negotiations said an agreement should be reached by year-end.

The mines in Torre de Moncorvo were deactivated in the 1980s as they were not economically viable at the time. But Portugal has rich mineral deposits, including copper in the south of the country.

The economy ministry would not say if it was in talks with Rio Tinto, but a spokeswoman said "we are developing contacts and negotiations with various companies, some of them from the mining sector, to attract big investments to Portugal".

Rio Tinto would not comment.

(source Reuters)

Iron Ore-Prices flat to higher, Shanghai rebar slips

Thu Mar 24, 2011 4:31am GMT

* Weak China steel demand continues to weigh
* Rio hints at move away from quarterly pricing system
By Manolo Serapio Jr

SINGAPORE, March 24 (Reuters) - Spot iron ore prices were flat to higher and bids remained scarce on Thursday as the few buyers in the market exercised caution due to weak steel demand in top buyer China.

Chinese steel mills, burdened by huge inventories of steel products and thin demand, had been slow in buying iron ore after aggressive stockpiling early this year lifted prices of the steelmaking material to record highs in mid-February.

Iron ore prices have lost around 14 percent since hitting those peaks last month.

"Mills have big stocks of steel products and selling is very slow. That's the main problem for steel mills at the moment," said an iron ore trader in Shenzhen.

Shanghai steel rebar futures have been volatile of late, reflecting uncertainty on steel demand in China, the world's biggest consumer and producer.

The most traded October steel rebar contract on the Shanghai Futures Exchange slipped 0.4 percent to 4,708 yuan a tonne by the midday break.

The contract jumped nearly 2 percent on Wednesday after falling to four-month lows in the previous session.

"Buyers are cautious currently due to volatile moves in Chinese steel prices," Commonwealth Bank of Australia said of the iron ore market, but added that it expects some purchases to continue with port and mill stockpiles running low.

Indian ore with 63.5 percent iron content was quoted at $170-$172 a tonne, including freight, in China on Thursday, unchanged from earlier this week, said Chinese consultancy Umetal.

"People are saying prices could still drop to between $150 and $160," said the Shenzhen trader.

"But I think it's probably difficult for the market to go back up strongly again. At best, prices will be stable with mills only purchasing for short-term needs."

Iron ore indexes, based on spot deals in China and which global miners use in setting quarterly contract, were flat to higher on Wednesday.

The Steel Index's 62 percent benchmark .IO62-CNI=SI rose 0.7 percent to $165.50 a tonne and Platts' 62 percent index IODBZ00-PLT stood at $168.50, unchanged for a fourth straight session.

Metal Bulletin's 62 percent index .IO62-CNO=MB dipped 0.1 percent to $164.98.

Rio Tinto , the world's No. 2 iron ore producer, on Thursday hinted at moving away from the quarterly pricing system, noting that several miners are pricing ore on daily and monthly basis.

"We're seeing it is still an evolutionary process. This system has been accepted by a number of producers, but some are pricing according to quarter, daily or monthly," Sam Walsh, head of Rio's iron ore division, said at an industry conference in Beijing.

"The jury is still out where this will settle." (Reporting by Manolo Serapio Jr.; Editing by Jo Winterbottom, sourced Reuters)

Tags :Platts, Spot prices for 63.5% Indian fines,

India NMDC expects to renew Japan iron ore

Tue Mar 22, 2011 6:22am EDT

By Ratnajyoti Dutta & Krittivas Mukherjee

NEW DELHI(Reuters) India's top iron ore miner NMDC Ltd (NMDC.BO) expects to renew soon a five-year iron ore contract with Japanese customers which expires at the end of March, the company's top executive said.

"India and Japan will have to renew the contract which they had for the last five years. I am sure there will be an agreement signing," state-run NMDC Chairman Rana Som told the Reuters Global Mining and Steel Summit.

NMDC supplies to a consortium of Japanese steels companies called Japan Steel Mills and to POSCO (005490.KS) in South Korea.

He added that despite power shortages from the earthquake and tsunami that crippled production at several steel mills and other industrial units, Japan had not asked for supplies to be halted.

"It could be that the Japanese are trying to see a situation (where) they would like to manage some supply and bring it back to the stock so that whenever they start production, they will not have to wait for the stocks to come.

"I believe at least so far as contract negotiations are concerned, they will try to maintain the continuity not withstanding the fact that the physical lifting will be affected by their economic condition."

NMDC's contract with South Korean importers is also up for review and Som said he was confident that a deal would be signed.

NMDC's contract with Japan Steel Mills was on an annual basis for the first four years. The buyers had agreed to switch to a quarterly price mechanism in line with other firms such as BHP Billiton (BHP.AX) BHP.L for the 2010/11 fiscal year.

The current price agreement for the January-March period with Japanese steelmakers and South Korea's POSCO has been fixed at about $140 per tonne for iron ore fines and about $158 for lump variety on free on board (FOB) basis.

IRON ORE PRICES

Global iron ore prices will bottom out at about $140 per tonne because of reduced demand from disaster-hit Japan, but the trend could reverse in six months, Som said.

Spot iron ore prices .IO62-CNI=SI had lost about 14 percent since touching record highs near $200 a tonne in mid-February as slow Chinese steel demand turned off buyers and worries emerged lower Japanese steel output could hit its iron ore imports.

Som said iron ore prices may continue to fall over the next six months, before a demand-driven rebound drives prices to "beyond $170" per tonne.

"Once the Japanese steel mills start their production, they will have to build more stock, so therefore this phenomenon of falling prices of iron ore and lack of demand from Japanese steelmaking could be a short-term phenomenon," Som said.

"I am expecting in about six months or so the whole situation will have a different trend. What will happen is that Japan will start the reconstruction in a big way so their production will pick up and it will pick up at the pre-recession level."

Indian prices generally follow the global market, dominated by Australian and Brazilian miners, with China buying on spot basis for its low-grade ore needs.

India, the world's third-largest supplier of iron ore, produced 226 million tonnes in 2009/10 and exported 117.37 million tonnes, most of it to China and about two percent of it to Japan.

OUTPUT, OVERSEAS ASSETS

NMDC produced about 25 million tonnes of iron ore in 2010/11, mostly for local sales -- slightly below recent averages of 29 million tonnes. Som said the company was expected to up production by two million tonnes in 2011/12 on improved mining activities.

"We are keeping a provision of three million tonnes (for exports) and balance 28 million tonnes for domestic market," Som said.

Iron ore exports from India are likely to fall 35 percent to about 58 million tonnes in the next fiscal year, weighed by environmental curbs, a four-fold rise in export tax and a continuing ban on exports from a major producer state.

Som said though NMDC had a comfortable reserve of iron ore, it was hoping to achieve "long-term raw material security" for Asia's third-largest economy through overseas acquisition of mines, including two assets in Australia over the next two months.

"So NMDC's approach in iron ore has been that it will join hands with junior miners for developing the mines, exploring it and developing it and then mining it."

He said the mines could start production in about 30 months.

The output from the two Australian mines will be over and above the company's production target of 50 million tonnes by 2014/15. Som did not say how much the two mines could produce.

COAL-TO-PETROL

NMDC has signed a deal with state-run Coal India (COAL.BO) and the eastern state of West Bengal to develop a two billion tonnes coal block. The project is awaiting clearance from the federal government.

South Africa's Sasol (SOLJ.J) has evinced an interest in acquiring a minority stake in the project to produce liquid fuel from coal. Sasol signed a deal with India's Tata Group last year to invest $10 billion in a similar coal-to-liquid project in eastern Orissa state.

"They (Sasol) want equity partnership of about 10 percent. It is absolutely fine," Som said.

"Coal India and we get the major equity and some equity will also go to the West Bengal government."

India, growing at more than eight percent a year, will need to keep burning cheaper fossil fuel to expand the reach of electricity to the half of its one-billion-plus population without power. India imports more than a third of its oil needs.

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