Brazil Samarco Signs Pellet Deals With Lion Group, Nu-Iron

Brazil's Samarco Mineracao SA has settled 2009 iron ore pellet deals with two more steel mills following its setting a reference price with Indonesia's Krakatau Steel on Monday, Samarco said Tuesday.

The two steelmakers are Malaysia's Lion Group and Nu-Iron of Trinidad and Tobago.

Both accepted the new price at $1.2523 per dry metric ton unit, or approximately $84 per metric ton, for Samarco's direct reduction iron ore pellets. This is 48.3% lower than the 2008 price, Samarco said

Samarco has an annual 2 million metric ton supply contract with Lion Group and a 1 million ton contract with Nu-Iron.

Samarco is jointly owned by Brazilian mining giant Vale SA (VALE) and its global competitor, Australia's BHP Billiton Ltd. (BHP).

Samarco said Monday it would supply 900,000 tons of the pellets to Krakatau.

In late May, Samarco said it would continue operating its iron ore pellet plant below capacity for at least another four months.

Two of Samarco's three units, each with 7 million metric tons a year capacity, were mothballed at the end of November owing to falling demand.

Samarco's production capacity is 21.6 million tons a year, but the company expects to produce only 14 million tons in 2009.

All Samarco's output is exported.

-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; [e-mail]