London (Platts)--17Feb2011/821 am EST/1321 GMT
Russian Metalloinvest, the country's biggest iron ore producer, said Thursday it has signed four-year supply contracts with local steelmaker NLMK for 21.6 million mt of iron ore pellets. Metalloinvest said both companies "successfully developed a pricing scheme for raw materials supplied under the long-term contracts based on applicable market indicators," according to a company statement. "For the duration period of the contracts, pellet prices will be determined using a formula reflecting pricing dynamics in the international iron ore market," it said. Pelletization costs are estimated at $15-20/mt for converting iron ore fines to the material which can be used in blast furnaces without sintering, based on information Platts has gained through market sources globally. The contract will allow for for stable pellet supply to NLMK's expanding production facilities in Lipetsk, it said. Pellets to NLMK's plant at Novolipetsk will be delivered from Metalloinvest's Lebedinsky and Mikhailovsky mining and processing plants less than 400 km from Lipetsk, the company added. NLMK plans to boost production capacity by 40% to 17 million mt/year by launching a new 3.4 million mt blast furnace this year at Novolipetsk, it said.--Hector Forster, hector_forster@platts.comSimilar stories appear in Steel Markets Daily. See more information at http://bit.ly/SteelMarketsDaily