BHP, Asian Steelmakers Agree; Gindalbie Up

Darlington Musarurwa
30 Mar, 2010
New York City

Australian stocks edged a fraction higher. BHP Billiton said it finalized iron ore shipment quarterly contracts with most customers in Asia. Newcastle coal exports rise 54%. Leighton Holdings to update debt investors.

[R]3:00 AM New York, 7:00 PM – Australian stocks edged a fraction higher. BHP Billiton said it finalized iron ore shipment quarterly contracts with most customers in Asia. Newcastle coal exports rise 54%. Leighton Holdings to update debt investors.[/R]

Australian benchmark index rose 0.4% after Gindalbie Metals struck a deal with its Chinese partner Ansteel for a life-of-mine production contract worth A$70.8 billion.

BHP Billiton also announced that it reached an agreement with many Asian producers for short-term iron ore supply contracts compared to the previous annual contracts.

In Sydney trading ASX 200 climbed 0.4% or 19.5 to 4,916.80.

Of the ASX 200 index stocks, 107 rose, 72 fell, and 21 were unchanged. Gindalbie Metals led gainers in the index shares with a rise of 7.3% after reaching a A$70.8 billion deal with Chinese Ansteel.

The Australian dollar edged up 0.1% to 91.85 U.S. cents.

BHP Agrees Short-Term Iron Ore Contracts

BHP Billiton reported today that it has reached an agreement with “a significant number of customers throughout Asia” to move the existing iron ore contracts that were previously priced annually to “a shorter-term landed price equivalent basis.”

The report notes that the change allows the company to achieve market clearing prices.

BHP Billiton and other iron ore miners in Australia and Brazil prefer to have a quarterly contract that reflect spot market prices compared to annual price revisions.

Japanese steel makers Nippon Steel and Sumitomo Metal Industries have already reached an agreement with Brazilian iron ore producer Vale for a 90% increase for the June quarter.

However, the two Japanese companies are yet to conclude a deal with BHP Billiton.

South Korean steel maker Posco has agreed a provisional agreement with Vale on a 90% rise in prices to between $100 and 110 a ton.

Separately, the Australian reported that a BHP spokeswoman said the company will have “different pricing solutions in place for different customers.”

In addition, Gindalbie also announced that it has sealed a A$70.8 billion iron ore sales contract with its Chinese partner Ansteel for a life-of-mine production from their Karara magnetite project in Western Australia.

Karara has the potential to produce more than 30 million tons per annum for 30 years.

The first shipment to China under the new deal is expected to occur in the second half of 2011.

Newcastle Coal Exports Rise 54%

Newcastle Port Corp. reported today that the volume of coal shipments in the week ended March 29 rose 54% to 1.7 million metric tons from 1.1 million tons a week earlier.

The number of vessels waiting to load 3.87 million tons of coal rose to 52 from 50 a week ago, while coal ships waited to load for an average of 18.25 days from 15.64 days a week earlier.

ASX Movers

Nufarm Limited led decliners in the S&P ASX 200 index with a loss of 6.4% followed by losses in Energy World Corporation Limited of 5.3%, in Ansell Limited of 3.4%, in Envestra Limited 2.8% and in Challenger Financial Services Group Limited 2.7%.

Gindalbie Metals Ltd led gainers in the S&P ASX 200 index with a rise of 7.2% followed by gains in Boart Longyear Limited 6.5%, in AWB Limited of 6.1% and in Mirabela Nickel Ltd of 5.5%.

Other Movers

AMP Limited the wealth management company rose 1.1% to A$6.38.

Australia and New Zealand Banking Group Limited rose 0.08% to A$25.45.

AWB Limited added 6.1% to A$0.95 after the former monopoly wheat exporter and Gavilon LLC signed a non-binding agreement for the sale of AWB Geneva and the formation of a 50:50 joint venture of the AWB Australian Commodity Management business.

Commonwealth Bank of Australia fell 0.4% to A$56.77.

Gindalbie Metals Ltd advanced 7.2% to A$1.18 after the iron ore company finalized a long-term contract with joint venture partner, Ansteel, covering the life-of-mine production from the Karara Iron Ore Project in Western Australia.

National Australia Bank Limited closed unchanged at A$27.70 after the bank is close to signing a A$13.3 billion takeover of Axa Asia Pacific.

Westpac Banking Corporation rose 0.2% to A$28.12.