WISCO Clinches Iron Ore Deal With Venezuela

China's third largest steel maker announced a deal with CVG that is more than US$ 20 lower than the price set by the Brazilian mining giant Vale

(Beijing) - Wuhan Iron and Steel Co. (WISCO), China's third largest steel maker, announced on July 21 that it has reached an agreement with Venezuelan iron ore supplier on the 2010 ore contract price.

According to WISCO, the iron ore price from Corp Venezolana de Guayana (CVG) is more than US$ 20 lower than the price set by the Brazilian mining giant Vale with Japanese and South Korean steel mills for delivery in the first three quarters. The price cuts are expected to save 400 million yuan for WISCO in its 2010 iron ore imports.

Venezuela will also adopt the price agreed with WISCO as its benchmark price for iron ore supply contracts with other countries this year.

“This is the first-ever contract under China prices,” WISCO said in the statement. “It’s also a significant starting point to move away from control by the world’s top three mining giants.”

In October last year, WISCO and CVG signed a contract for seven-year iron ore supply, involving more than 40 million tons of ore. In December, WISCO again won priority and rejection rights in ore purchase with CVG.

In 2009, WISCO imported 480,000 tons of iron ore from Venezuela, saving a total of 152 million yuan from the costs of purchase in spot market.