General Steel Holdings, a non-state-owned steel producer in China, announced that its principal manufacturing facility, Shaanxi Longmen Iron and Steel Co. (Longmen Joint Venture), signed a supply agreement with Rio Tinto Iron Ore Asia for procurement of imported iron ore in 2014, commencing from April.
Under this agreement, Rio Tinto will directly provide Longmen Joint Venture at least 1.5Mt of imported iron ore at a favourable price based on the average monthly iron ore index upon delivery.
“We are thrilled to sign our first direct supply agreement with Rio Tinto”, said Henry Yu, chairman and CEO of General Steel. “The ability to directly procure from one of the world’s largest supplier will significantly lower our sourcing costs and ensure timely delivery of the highest quality imported iron ore. We believe the large guaranteed supply coupled with pre-determined favourable pricing terms provides us with more operational flexibility and greater cost advantages. Importantly, our commitment to the large purchase volume demonstrates confidence in our leading position in Western China and optimism of a turnaround in our core marketplace and return to revenue growth in 2014.”
