China's Baoshan Iron & Steel said on Monday it had signed a three-year coking coal supply contract with major Australian miner Rio Tinto to kick off new long-term cooperation for another key raw material.
Rio Tinto will supply coking coal to the Chinese steel firm starting this year, making Baosteel its first long-term Chinese coal buyer.Baosteel didn't disclose the supply volume on its website report.
Rio Tinto is the world's third biggest miner by market value and produces both coking coal and thermal coal.Most of the state's coal industry was shut in December and January as flood waters inundated pits, damaged rail lines and shut ports, and most experts predicted it could take until the end of the first quarter for the industry to return to normal.
Coal production in Australia's flood-hit Queensland state could drop by between 25 percent and 50 percent this quarter, leading to tighter supply for Asian steelmakers.
Australia is the world's largest exporter of coking coal, and Queensland state accounts for the majority of Australian coking coal production.
Baosteel, China's top listed steel mill, said on Friday it has exchanged ideas with Australia's major miner Rio Tinto on how to improve iron ore pricing.Baosteel used to lead other major domestic steel mills in the annual negotiation with global miners including Vale >, but miners pushed buyers to accept an index-based quarterly pricing mechanism to take advantage of the rising spot market.