China on Monday announced that it had secured a six-month iron ore supply contract with Australia's Fortescue Metals at a price lower than those offered by the world's top iron ore producers, a deal which will allow the country to continue its hard-line stance on negotiations with Rio Tinto, BHP Billiton and Brazil's Vale.
The China Iron and Steel Association (CISA) said Fortescue's iron ore supplies in the second half of this year would be priced at between 35 and 50 per cent lower than last year's prices. The agreed prices were about 3 per cent below the prices agreed by other Australian producers with non-Chinese steel mills, Fortescue said.
In return, China will provide Australia's third-largest iron ore exporter with up to US$6bn in future financing that will allow Fortescue to expand its annual production to 95m tonnes.