FMG increases its Chinese contracts

Speaking at Fortescue Metals Group's AGM this afternoon, the Perth-based mining company's chief executive, Andrew Forrest announced his company has enhanced long term contracts with its Chinese customers.

Mr Forrest discussed the progress being made with a China steel mill, which is currently in the midst of aggressive negotiations, to increase the take off of iron ore.

Although commercial confidence prevents naming the mill, Mr Forrest, who toured China last week, outlined three and a half million tonnes in increased purchases of iron ore from FMG was on the cards.

During his time in China he concluded a variation agreement to enhance an existing long term contract with one of China's top-five steel mills.

This variation provides for a 3.5 tonne increase in purchases of FMG iron ore by this mill over the next calendar year.

The contract has now been amended by the parties, with the customer committing to take deliveries of up to 5.5 million tones per annum over the calendar year 2009, as FMG ramps up to the production rate of 55 million tonnes per annum during that time.

Mr Forrest was emphatic that his company was in a sound financial position having delivered a trading profit of $360 million for the third quarter.

Mr Forrest said China was the last country to have gone into any kind of economic meltdown and he predicted that it will be the first one out.

"For FMG, it's business as usual," he said to a packed room of FMG shareholders at the Hyatt this afternoon.

Mr Forrest said despite a dour picture painted by analysts in regards to China's growth, "you don't go much further than the Chinese government" to be able to paint an accurate portrait of its economy.

"In their type of economic system, if they say they will grow by a certain amount, they'll grow by that much," he said.

Obviously in good spirits, Mr Forrest joked with shareholders about the current economic conditions in Australia.

"I will enjoy having with you a cup of tea, it would be champagne but we're in Australia," Mr Forrest said.