Atlas Iron CEO: Started Iron Ore Talks For Wodgina Project
August 04 2009 - 3:17AM
Dow Jones News
Atlas Iron Ltd. (AGO.AU) said Tuesday it has started iron ore
off-take talks with potential customers from China, Taiwan, Japan
and Thailand for its Wodgina project in Western Australia, and
could keep its current "mutual fairness" iron ore pricing
system.
The Perth-based miner has sold all production from its Pardoo
mine for the next three years, using a system based on the annual
benchmark system, but one that also incorporates clauses that
account for changes in the spot market, Managing Director David
Flanagan told reporters at the Diggers and Dealers forum.
Pardoo is scheduled to produce 1 million tons of iron ore during
2009, rising to 2.5 million tons in 2010.
The long-standing annual benchmark system is losing its place as
the predominant pricing system, with producers and consumers
increasingly moving to a more flexible system that allows for
changes in prices during the year.
The majority of seaborne iron ore trade is still priced using
the benchmark system, but BHP Billiton Ltd.'s recent announcement
that it has sold about 30% of product on a mix of spot, quarterly
and index-linked basis has prompted analysts to predict benchmark
pricing may soon be redundant.
"We would like to see less tension during iron ore talks,"
Flanagan said, referring to the drawn out negotiations with Chinese
steel mills and dominant producers Rio Tinto PLC, BHP and Vale that
still haven't concluded with the contract year starting on April
1.
"We currently have no benchmark, so we're selling on spot," he
said.
Atlas Iron plans to boost output to 6 million metric tons a year
by 2012, up from 1 million tons during 2009.
-By Elisabeth Behrmann, Dow Jones Newswires;
612-8272-4689, elisabeth.behrmann@dowjones.com