BHP Billiton Secures US$4.3 Billion Deal With JFE Steel Corp.

Jul. 21–SYDNEY — The world’s largest mining company, Anglo-Australian BHP Billiton, announced on Thursday it has signed a US$4.3 billion deal to supply iron ore to JFE Steel Corp., a leading Japanese steel mill.

Under the 11-year deal, JFE Steel will also take a 20 percent share in a sublease of the Yandi mine, located in the northern part of Western Australia state. The mine will supply 16 million tons of ore each year.

BHP Billiton will retain a 68 percent interest in the mine with its Japanese joint venture partners ITOCHU Minerals & Energy of Australia and Mitsui Iron Ore Corp. retaining interest of 6.4 percent and 5.6 percent respectively.

BHP Billiton President Ian Ashby said in a statement that the deal reflects the value of the long-standing relationships BHP has developed with Japanese steel mills for almost 40 years.

Western Australia Premier Geoff Gallop, in a statement on his website, welcomed further Japanese investment in his state’s iron ore industry and noted that Japan received 35 percent of the state’s iron ore exports in 2004, worth more than A$2 billion (US$1.5 billion).

“Today’s agreement between BHP Billiton and JFE Steel is testimony to the excellent relationship that exists between Western Australia and Japan and bodes well for a strong and positive future,” he said.

Noting sustained and increased demand for iron ore from Japan and other Asian countries, the premier said Western Australia’s iron ore industry is continuing to improve product quality and infrastructure.

“In addition, many new expansions and new projects are also coming on stream or being announced, and it is anticipated the state will have iron ore production capacity of 300 million tons by the end of 2006 and potentially more than 400 million tons by the end of the decade,” he said.

Shares in BHP gained A$0.37 following the announcement of the deal.

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