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Iron Ore Prices to Increase 65% for Nippon Steel and Posco

02/19/2008 - Companhia Vale do Rio Doce concludes iron ore price negotiations for 2008 with Nippon Steel and Posco, resulting in a 65% increase in prices for Southern System fines.

Companhia Vale do Rio Doce (Vale) has concluded its iron ore price negotiations for 2008 with Nippon Steel Corp. (NSC), the largest Japanese steelmaker, and Posco, the largest Korean steelmaker.
 
As a result of these negotiations, iron ore prices for Southern System fines (SSF), FOB Tubarao, increased by 65% relative to 2007 reference prices. For the higher-quality Carajas iron ore fines (SFCJ), the parties agreed to a price premium of US$ 0.0619 per dry tonne Fe unit over the 2008 price for SSF.
 
The new reference prices per dry tonne Fe unit for 2008 are US$ 1.1898 for SSF, and US$ 1.2517 for SFCJ.
 
According to VALE, the significant price increase for 2008 reflects the continuity of very tight conditions that continue to prevail in the global iron ore market. VALE said that it remains committed to the benchmark pricing system, as evidenced by this iron ore price settlement with large high-quality companies and traditional customers such as NSC and Posco.
 
Vale also noted that it supports its commitment to customers through substantial investments to increase production capacity. Despite sharp increases in investment and operational costs, the company has expanded iron ore production at an average annual rate of 14.1%, between 2001 and 2007. VALE’s current development projects are part of its overall plan to reach a production capacity of 450 million tonnes per year by the end of 2012. The projects require substantial investment in new mines as well as enlargement of the company’s railroad and port infrastructure.