Fortescue is close to signing a supply agreement with China’s state-backed iron ore buyer following a BHP deal last week that drew a line under months of talks.
Fortescue, currently in talks according to sources, is expected to finalise its long-term settlement with China Mineral Resources Group in the coming months.
The Andrew Forrest-chaired miner is currently operating under short-term agreements, the source said, that have been extended while the negotiations continue,
CMRG and Fortescue did not immediately respond to emailed queries.
BHP — which has been locked in a months-long standoff with CMRG over iron ore sales — confirmed last week that it had struck a deal. The world’s largest miner did not provide details on terms and conditions, but the announcement has prompted traders and investors to look for other settlements.
On an analyst call on Friday, Fortescue executives said they had travelled to China earlier that week and met with CMRG.
Asked how the miner’s relationship with CMRG might work after a long-term deal is reached, sales and marketing director Ben Kuchel said it was too early to specify the future routine for negotiations.
It was reported in December that Fortescue and Rio Tinto had agreed to extend existing supply agreements with CMRG.
Talks between miners and CMRG have hinged on key issues including pricing benchmarks. Fortescue has already shifted to using an average of China’s Mysteel index and the Argus Iron Ore Index for its products, while its higher-grade Iron Bridge concentrate is priced against the Platts 65 per cent index, according to a presentation from the CMRG research institute in March.
Bloomberg
