SYDNEY, April 4 (Reuters) - Australian iron ore pellet producer Grange Resources Ltd said on Monday it has agreed with its major customers, Bluescope Steel and Jiangsu Shagang International Trade, to price iron ore pellets using Platts' benchmark.
The pricing mechanism, which will cover the sale of Grange's Savage River pellets, will be based on Platts 62 percent index for iron ore fines, to be adjusted for the higher 65 percent iron content of the pellets, Grange said.
Grange managing director and chief executive Russell Clark said in a statement that the agreed pricing mechanism will be applied retrospectively to all shipments from April 1, 2010 which was covered by interim prices.
'The result is that Grange will receive $70 million in cash to reflect the differences between the interim pricing and the pricing mechanism now agreed,' Clark said.
With the current Platts index price for iron ore pellets at more than $200 per tonne, free on board basis, Clark said Grange is planning to produce around 2 million tonnes of pellets in 2011.
Platts iron ore index is widely used by global miners like Vale and Rio Tinto in pricing sales of the steelmaking raw material to steel producers since the industry shifted to a more flexible quarterly pricing system after abandoning a 40-year-old annual arrangement in April last year.
Platts 62 percent iron ore index stood at $175.50 a tonne, including freight, on Friday.
(Reporting by Manolo Serapio Jr.; Editing by Ed Davies) Keywords: GRANGE PRICING/ (manolo.serapio@thomsonreuters.com)(+65 6870 3884)(Reuters Messaging: manolo.serapio.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The pricing mechanism, which will cover the sale of Grange's Savage River pellets, will be based on Platts 62 percent index for iron ore fines, to be adjusted for the higher 65 percent iron content of the pellets, Grange said.
Grange managing director and chief executive Russell Clark said in a statement that the agreed pricing mechanism will be applied retrospectively to all shipments from April 1, 2010 which was covered by interim prices.
'The result is that Grange will receive $70 million in cash to reflect the differences between the interim pricing and the pricing mechanism now agreed,' Clark said.
With the current Platts index price for iron ore pellets at more than $200 per tonne, free on board basis, Clark said Grange is planning to produce around 2 million tonnes of pellets in 2011.
Platts iron ore index is widely used by global miners like Vale and Rio Tinto in pricing sales of the steelmaking raw material to steel producers since the industry shifted to a more flexible quarterly pricing system after abandoning a 40-year-old annual arrangement in April last year.
Platts 62 percent iron ore index stood at $175.50 a tonne, including freight, on Friday.
(Reporting by Manolo Serapio Jr.; Editing by Ed Davies) Keywords: GRANGE PRICING/ (manolo.serapio@thomsonreuters.com)(+65 6870 3884)(Reuters Messaging: manolo.serapio.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.