BHP Billiton, the world's second largest mining company and the third largest seaborne iron ore supplier has signed an eight-year iron ore supply contract with Hyundai Steel of South Korea to deliver 22 million tonnes of iron ore commencing 2009 through 2017.
The Anglo Australian miner's long-term iron ore contract with the Korean steel maker comes after its rival Rio Tinto inked a 33-per cent price cut from the 2008 price, in its latest annual contract price for ore with Japanese steel maker Nippon Steel Corp and Posco of South Korea in May. (See: Chinese steelmakers upset with Nippon Steel's ore price-cut deal with Rio)
The move had angered China-the biggest importer of iron ore, since Beijing was seeking a 40 to 45 per cent price cut from last year's contract price in view of the global economic downturn.
BHP Billiton has however not disclosed the price it has agreed to supply the iron ore to Hyundai Steel and said in a press release, ''All commercial terms of the contract remain confidential as per the contractual agreement.''
Nevertheless, analysts feel that the price is likely to be similar to the benchmark rates agreed between Rio Tinto and steelmakers from Japan and Korea in May.
Even if the rate is one per cent below the benchmark rate by Rio Tinto in May, it would hardly make a dent since the supply deal is for a mere 22 million tones over a period of 8 years, which averages out to 2.75 million tones annually.