BHP Signs Eight-Year Iron Ore Deal With Hyundai

BHP Billiton Ltd has signed an eight-year supply contract to deliver 22 million tonnes of iron ore to South Korea's Hyundai Steel.

BHP Billiton president of marketing Tom Schutte said the deal will strengthen the company's relationship with Hyundai Steel and comes on top of a long term coking coal supply contract agreed last year.

The resources giant was tight-lipped on what price had been arranged with Hyundai Steel.

"Although all commercial terms of the contract remain confidential, as per the contractual agreement, we are pleased to see that the contract satisfies each company's interest," Mr Schutte said.

But Independent resources sector analyst Peter Strachan of StockAnalysis said it was likely the rate would be set at current benchmark rates agreed to by other South Korean steel makers.

Mr Strachan said the agreement was only small for a company the size of BHP Billiton and did not compare to the big deals being done with Chinese steel giants.

"To put that into perspective, 22 million tonnes over eight years is about equal to two weeks of China's imports," he said.

"China is importing, not using but what they import on average, is about 40 million tonnes of iron ore per month."

Hyundai Steel is building a steel works in Dangjin with an annual capacity of eight million tonnes of crude steel.

The first blast furnace plant will being operating from January 2010.

President of Hyundai Steel, Y C Woo, said in a statement the iron ore deal was a further confirmation of the company's strong relationship with BHP Billiton.

Hyundai Steel has now secured a total of 13.6 million tonnes of iron ore to operate the integrated steel works.

Under the new contract, delivery is effective from 2009.

Source: Sydney Morning Herald