1 October 2009 by Paul Hayes
Fortescue Metals failed to meet yesterday’s deadline for a US$6 billion funding deal with Chinese banks.
“Fortescue Metals Group advises, with regard to its agreement announced on 17 August 2009 with the Baosteel Group and China Iron & Steel Association (CISA), that the condition subsequent relating to the completion of finance by 30 September, 2009 will not be met in time,” the company announced in a statement to the Australian Securities Exchange.
The funding was part of a deal Fortescue reached with Baosteel and CISA to supply the Chinese steel industry with 18 million tonnes of iron ore by 31 December.
Fortescue’s deal represented a 3% discount to the benchmark price Rio Tinto set with non-Chinese steel makers in May.
The iron ore pricing agreement may now be under a cloud as it was subject to Fortescue completing the financing deals with Chinese banks.
“Fortescue intends to continue working co-operatively with CISA including the provision of attractive iron ore pricing if requested,” the company said.
The Fortescue pricing deal was at the time seen as a victory for Chinese iron ore price negotiators, who have steadfastly refused to accept a proposed 33% price cut that Rio Tinto had offered Japanese and Korean customers.
CISA has been holding out for a price cut of around 40%.
Reports from China earlier this week have said that CISA is now in iron ore negotiations with both BHP Billiton and Brazil’s Vale, after talks with Rio Tinto were suspended.
Source: http://www.miningaustralia.com.au/Article/Fortescue-misses-funding-deadline/500569.aspx.
