Sinosteel extends Midwest iron ore sales agreement timeframe

China-owned Sinosteel Corporation Group has extended a sales agreement for 1.6 million tonnes of iron ore with Midwest Corporation Ltd to March 31, 2009, the West Perth-based company announced today.

The full text of a Midwest announcement is pasted below

Midwest Corporation Limited ("Midwest") is pleased to announce that the Sinosteel Corporation Group ("Sinosteel") has extended its sales agreement with the company to 31 March 2009 for 1.6 million tonnes (mt) of iron ore.

The 1.6mt of lump and fines will come from Midwest's Stage 2 operation at the Koolanooka/Blue Hills DSO project.

The price is aligned to the Mt Newman benchmark.

To date Midwest has shipped 1.1mt of iron ore fines to Sinosteel as part of the existing contract.

The company expects to negotiate lengthier contracts with Sinosteel in 2008 in conjunction with discussions on the Weld Range joint venture ore.

Commenting on the agreement, Midwest chief executive officer, Mr Bryan Oliver said, "This extension further confirms the strength of our relationship with Sinosteel as a customer and joint-venture partner."

The extended sales agreement with Sinosteel follows a significant recent increase in iron ore reserve to 8.4mt at an average grade of Fe 58% for Koolanooka-Blue Hills.

This upgrade in reserves provides a substantial basis for the proposed expansion of hematite iron ore sales to Sinosteel from 1mtpa to 2mtpa. This expansion is expected to coincide with the transition to open pit mining production at the Koolanooka-Blue Hills DSO project and the completion of the new shiploader at Berth 5 at the Port of Geraldton.

The company is currently seeking various statutory approvals for Stage 2 and expects to commence operations in early 2008 once these approvals have been granted. Tenders have closed for mining crushing and screening operations.

Sinosteel is involved in the management and funding of significant studies joint venture programmes with Midwest at the much larger Weld Range Hematite and Koolanooka Magnetite Projects.

Sinosteel is one of the largest steel industry trading organisations in China. In 2006 it imported in excess of 21mt of iron ore.