Chinese steel mills still buying
SYDNEY, Australia (CNN) -- China's appetite for raw materials shows no sign of abating, with four steel mills agreeing to buy an extra $3.2 billion of Australian iron ore over the next 10 years, global miner BHP Billiton has said.
The mills are Wuhan Iron & Steel, Maanshan Iron & Steel, Jiangsu Shagang Group and Tangshan Iron & Steel.
The four are joint venture partners with BHP Billiton and two Japanese companies -- Itochu Minerals & Energy and Mitsui Iron Ore Corp. -- in the Wheelarra project near Mount Newman in Western Australia.
With its economy growing at 8 percent-plus in recent years, China has become a huge buyer of a range of minerals, including iron ore and coking coal.
BHP Billiton and other mining houses such as Rio Tinto have seen sales and profits surge on the strength of the Chinese economic boom.
BHP Billiton said the Chinese mills signed the formal agreement for the Wheelarra project Tuesday. When the deal was announced in March this year, BHP Billiton said it covered sales of 12 million tonnes per year of Mount Newman iron ore over the next 25 years.
The new sales commitments are for an additional 12 million tonnes per year from BHP's Area C mine, 120 kilometers (75 miles) north of Newman.
BHP Billiton Iron Ore president Graeme Hunt said the doubling of sales commitments reflected the value of the strategic ties with the Chinese steel mills.
"This relationship will also ensure BHP Billiton maintains its share of the growing Chinese iron ore market," he said.
The company plans to lift its iron ore capacity in Western Australia to 110 million tonnes a year by the end of 2004, and to approve a further upgrade next year that will see capacity eventually reach 145 million tonnes.
Shares in BHP Billiton are 0.87 percent higher Tuesday afternoon at A$13.88, near last week's record high of A$14.08. Rio Tinto is up 0.32 percent to A$37.30. The benchmark S&P/ASX200 is flat, up just 0.07 percent to 3623.0.
