Reuters: Hot Stocks: UPDATE 2-Trader Glencore strikes Bellzone iron ore deal

Reuters: Hot Stocks Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-Trader Glencore strikes Bellzone iron ore deal Aug 9th 2012, 10:35 Thu Aug 9, 2012 6:35am EDT * To buy Bellzone's 50 pct of output in Forecariah mine * Bellzone's partner could also sell its output to Glencore * Bellzone shares jump 6.7 percent By Clara Ferreira-Marques LONDON, Aug 9 (Reuters) - Glencore has struck a deal to buy at least half of the output from Guinea's Forecariah iron ore mine as part of the commodities trader's drive to grab a bigger share of the lucrative market for the steelmaking ingredient. The world's largest diversified commodities trader said on Thursday it had reached a deal with Bellzone Mining to buy its 50 percent of output from Forecariah, a joint venture with China International Fund. Bellzone's Chinese partner has "tag-along" rights, meaning it could also sell its slice of production to Glencore. Commercial production at Forecariah, in one of West Africa's most promising but toughest iron ore regions, started in May. Production will be ramped up through 2012 to a rate of 3 to 4 million tonnes per year, significant for the region though a fraction of the the 1.1 billion tonne global market. The deal covers the life of the mine, allowing Glencore to benefit from a potential expansion to 10 million tonnes. Traders like Glencore and rival Vitol, which struck its maiden deal in March, have been piling into physical iron ore alongside traditional buyers like steelmakers, tempted by large volumes, an increasingly attractive pricing mechanism and China's appetite for steel to feed its growing cities. However, they are competing for space in a market dominated by Vale, Rio Tinto and BHP Billiton - which have a joint share of around 60 percent - leaving even the world's largest commodity traders to battle over production in emerging iron ore basins like West Africa. Thursday's deal includes a $15 million early payment facility after the first five ship loads - 750,000 wet metric tonnes - are sold. It envisages first export early in the fourth quarter of this year. The news boosted Bellzone's shares as analysts said the cash facility would help fund a plant upgrade to treat oxide material, while it also has a guaranteed buyer in Glencore. At 1020 GMT, Bellzone stock was up 6.7 percent at 16 pence, outperforming a 0.5 percent rise in the sector. Glencore shares were up 1.6 percent at 343.25 pence. Bellzone's flagship project is the Kalia Mine, also in Guinea, which plans to produce 46 million tonnes of oxide iron ore and iron ore concentrate in 2020. That mine is due to start iron ore production in 2015. Glencore has signed similar offtake, or supply, deals with iron ore miners London Mining and African Minerals in neighbouring Sierra Leone. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions