Chinese sign on to get local iron

BHP Billiton has announced $US3.2 billion in additional sales contracts over the next 10 years and the formal signing of the agreement for the Wheelarra joint venture.

The Wheelarra Joint Venture, which was signed announced in March this year, is with four of China’s leading steel mills and its existing Japanese joint venture partners ITOCHU Minerals and Energy of Australia and Mitsui Iron Ore Corporation.

The joint venture is centred on a sub-lease over BHP Billiton’s Jimblebar mine, near Newman in Western Australia, and involved sales of 12 million tonnes per annum of Mount Newman iron ore over the next 25 years.

BHP Billiton Iron Ore president Graeme Hunt said the doubling of sales and purchase commitments reflected the value of the strategic relationships BHP Billiton had developed with the Chinese steel mills.

“It is extremely pleasing to see additional benefits have already started flowing to both BHP Billiton and its Chinese partners as a result of the Wheelarra Joint Venture,” he said.

“We were always confident the agreement would underpin a strategic relationship which would grow beyond the sales contracts for the Mt Newman iron ore.

“This relationship will also ensure BHP Billiton maintains its share of the growing Chinese iron ore market.

The value of the iron sales from the Wheelarra JV, which includes the future production of the Brockman iron ore mine, is about $9.3 billion over the next 25 years.

Under the terms of the joint venture, the Chinese steel mills will take a 40 per cent interest in a sub-lease over BHP Billiton’s Jimblebar mine, near Newman in Western Australia.

BHP Billiton will retain a 51 per cent interest, with Japanse joint venture partners ITOCHU Minerals and Energy of Australia and Mitsui Iron Ore Corporation taking a 4.8 per cent and 4.2 per cent interest respectively.

Premier Geoff Gallop and State Development Minister Clive Brown, along with representatives from the four Chinese steel mills were present at the signing, which was held in Matilda Bay on September 28.