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Fortescue, Vale look to offer Brazilian-Australian iron ore blend by H2


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Fortescue, Vale look to offer Brazilian-Australian iron ore blend by H2

Followingthe partnership deal signedbetween Australia's Fortescue MetalsGroup Ltd. and Brazil's ValeSA in March, the sale of a blend of the two majors' iron ore is expectedto kick off by the second half, according to Fortescue CEO Nev Power.

"Weare looking at a number of options and there is a lot of test work going on. Wehope to have that product into the market by the second half of this year,"Power told delegates at Mines and Money Asia 2016 in Hong Kong on April 6.

The twocompanies plan to mix low-grade iron ore from Fortescue's Chichester Hub mines in Western Australia withiron ore from Vale's Carajasmine in Brazil. The new blended product targets the two miners' existing Chinesecustomers, according to a previous announcement.

Powerexpects the move to reduce Vale's costs as well as working capital. "We willwork with Vale to see if we could optimize our product offering for our customersin China. This could lead to bigger ideas and opportunities to collaborate,"he said.

Powermaintained a positive view toward China's demand for iron ore, on the back of astrong development outlook in Chinese and Asian markets.

"Chinawould become a very strong player in Asia, particularly through the One Belt, OneRoad and the Asian Infrastructure Investment Bank, to supply steel and manufacturegoods," he said, noting that continuing urbanization in China will also present huge demand for steel products.

In termsof price outlook, Power said the iron ore price is largely driven by market sentimentand the downward trend in production costs is unlikely to affect price.

"Insome two years, stocks at port have been relatively stable. But increasingly priceis driven by the market sentiment, with very high level of futures trading and derivatives,"he said.