Brazil’s Vale do Rio Doce signs agreement with Chinese steel makers for 19 pct price rise

26 September 2006

Sao Paulo, Brazil, 26 Sept – Brazilian mining giant Companhia do Vale do Rio Doce (CVRD) signed two contracts for supplying iron ore to Chinese steel makers in the last week, at prices agreed last June, a spokesperson from the Brazilian company told Macauhub.

After six months of negotiations with CVRD the Chinese customers accepted a 19 percent increase on the price of iron ore as compared with the company’s initial suggestion of 24 percent.

The two contracts were signed during a visit by the chairman of CVRD,, Roger Agnelli to China last week, company spokesperson, Kátia Luane told Macauhub.

CVRD extended its iron ore contract with the Betai Oron & Steel Group until 2031. CVRD currently supplies that Chinese customer with 4.2 million tons of ore per year, although the agreement makes provision for this amount to be increased.

“This is the longest contract signed by CVRD with Chinese customers and its amount can be increased to 7.2 million tons as of 2009,” a company statement said.

The chairman of CVRD also negotiated with Maanshan Iron & Steel, an agreement to supply iron ore from next year until 2013.

CVRD will supply Maanshan with 7.3 million tons of ore in 2007, but that amount may be increased to 8.3 million tons per year as of 2009.

The Brazilian company also set up a memorandum of understanding with Shougang Iron & Steel, which could lead to future deals between the two companies.

In the first half of the year, CVRD exported 161.4 million tons of iron ore to China, or 22.9 percent more than in the same period of last year.

China was the largest buyer for the Brazilain company in the first six months of the year, absorbing 28 percent of CVRD’s iron ore exports form January to March and 30 percent from April to June. (macauhub)