BHP Billiton lands US$3.2b contract

BHP Billiton (BHP-N) has negotiated iron ore sale commitments from four Chinese steel mills. The commitments have a potential value of US$3.2 billion over the next 10 years.

The four mills are Wuhan Iron & Steel, Maanshan Iron & Steel, Jiangsu Shagang Group, and Tangshan Iron & Steel.

The iron ore will be produced from Marra Mamba ore that is processed at the Area C mine, 120 km north of Newman in western Australia. The mine opened last October. The new sales will account for 12 million tonnes of ore per year.

Meanwhile, BHP has entered into a separate joint venture with the steel mills and BHP’s existing Japanese partners, ITOCHU Minerals & Energy of Australia and Mitsui Iron Ore. The so-called Wheelarra project is centred on a sub-lease over BHP Billiton’s Jimblebar mine and involves the sale of 300 million tonnes of iron ore over the next 25 years.