Australian iron ore miner, BC Iron, has secured a five-year off-take agreement for iron ore to be mined at its Nullagine project. Metals trader Tennant Metals will act as an agent and/or principal for the sale of a quarter of its iron ore production from Nullagine starting at 1.5 million tonnes a year from 2010.
BC Iron's managing director Mike Young said the off-take agreement was structured to minimise counter-party risk and provided immediate payment for ore on delivery via an Australian bank.
“The price of the ore will be referenced to the long-term benchmark iron ore price, with appropriate adjustments for the premium-quality nature of iron ore,” BC Iron said.
The Nullagine ore contains ultra-low phosphorus levels and had been labelled first class by a large Chinese steel company after being subjected to sinter test work.
BC Iron hopes to secure a binding agreement with Andrew “Twiggy” Forrest’s Fortescue Metals Group that will allow it to transport its ore to market using the miner’s nearby rail and port infrastructure in WA’s Pilbara region. However, it will be forced to use trucks at double the cost to start shipping iron ore to Australia's western coast if it fails to finalise a deal, Mr Young said on Wednesday.
Last month BC Iron announced a 64 per cent increase in the direct shipping ore resource for the Bonnie Creek channel iron deposit project at Nullagine to 46.2 million tonnes grading 57 per cent iron within an updated global resource totalling 80.2 million tonnes grading 54 per cent iron of mineralised CID.
Source: The West Australian
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