Brazil Samarco:Sets Pellet Reference Price With Krakatau Steel
June 15 2009 - 3:17PM
Dow Jones News
Brazil's Samarco Mineracao S.A. has set an iron ore
direct-reduction pellet reference price with Indonesia's Krakatau
Steel, Samarco said in a statement Monday.
Samarco is jointly owned by Brazilian mining giant Vale S.A.
(VALE) and its global competitor, Australia's BHP Billiton
(BHP).
The new price at $1.2523 dmtu, or approximately $84 per metric
ton, is 48.3% lower than the 2008 price, Samarco said.
Dmtu is a dry metric ton unit.
The agreement follows the recent price set for blast furnace
iron ore pellets announced with a group of Japanese steelmakers
worth $1.1043/dmtu, the statement said.
Samarco will supply 900,000 tons of direct-reduction pellets to
Krakatau, the company said.
Half of Samarco's pellet production is used in direct reduction
and half for blast furnaces, Samarco said.
In late May, Samarco said it would continue operating its iron
ore pellet plant below capacity for at least another four
months.
Two of Samarco's three units, each with seven million metric
tons a year capacity, were mothballed at the end of November owing
to falling demand.
Samarco's production capacity is 21.6 million tons a year, but
the company expects to produce only 14 million tons in 2009.
All Samarco's output is exported.
The plants are located at Porto Ubu in Espirito Santo state in
southeastern Brazil.
-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;
John.Kolodziejski@dowjones.com