Fortescue in talks to supply iron ore to India firms

Fortescue in talks to supply iron ore to India firms

Mumbai: Fortescue Metals Group, Australia’s third-largest iron ore miner, is in “preliminary talks" with Indian steelmakers for supplying iron ore, a senior official said on Wednesday.

Executive director Russell Scrimshaw, however, declined to name the Indian firms.

“All our customers are demanding more. I am encouraged by the interest shown by the Chinese steel industry," Scrimshaw said, adding exports to China could top 40 million tonnes in the current year to June 2011 and to 50 million tonnes by June 2012.

“We have over 50 customers in Asia, most of them are in China. But an increasing number of leading steel mills are in Asia outside of China," he told Reuters in an interview.

Fortescue is planning to invest $8.4 billion to nearly triple its iron ore production capacity to 155 million tonnes a year by mid-2014.

“We are positive about our current expansion to 155 million tonnes and there is demand for the tonnage".

Australia is the world’s biggest iron ore exporter, accounting for around 38% of global trade, but its output is dominated by global mining giants Rio Tinto and BHP Billiton.

When asked if iron ore prices may breach $200 a tonne, Scrimshaw said, “I don’t know the answer to that question. However, I think prices will remain strong."

Iron ore offers have inched up to above $170 per tonne since Tuesday amid tightening supply from India, the world’s third-largest iron ore producer.

India’s iron ore exports in October fell 30.4% from a year earlier to 6.4 million tonnes, data from the Federation of Indian Mineral Industries, a trade body, showed on Wednesday.

Two Indian iron ore miners said on Tuesday they will challenge a ban on iron ore exports issued by southern Karnataka state in the country’s top court, a move that would instil hopes of a revival in flagging exports of the resource from India.