N.Z. Steel to renegotiate ironsands contracts

Press, 6 May 1981, Page 29

N.Z. Steel to renegotiate ironsands contracts

FA Auckland Executives of New Zealand Steel will visit Japan and South Korea late this month to negotiate future supply of ironsand, in view of depressed world steel markets. Both countries have already taken reductions in the contract tonnage of ironsand supplied by N.Z. Steel, although the company says that they remain long-term customers. . A continued decline in ironsand concentrate sales to most market® was outlined by the company last month because of weaker international demand for steel products. Japan, which has the firmest contract of 10 years, last year negotiated a 20 per cent reduction in the 2.1 million tonnes a year it contracted from N.Z. Steel three years ago. That reduced level has been maintained since then, the company says. Now the South Korean state-owned Pohang Iron and Steel Company is tailing well behind in its three-year con-

tract to take slightly less than 600,000 tonnes of ironsand, due to expire on December 31. The ironsand was to be shipped in four loads of 50,000 tonnes a year to the Korean company, under a mutual understanding contract which allowed the price and volume.of concentrate to fluctuate with demand. The company, known as Posco. indicated last year that it could not fulfil the whole of the contract. N.Z. Steel confirmed that Posco had so far taken little more than half of the 600,000 tonnes, including 91,000 tonnes shipped last year, and had scheduled only two shipments this year, in February and July. The commercial manager of N.Z. Steel Mining, Ltd (Mr W. H. Vernon) negotiator of most of the ironsands contracts, said that talks this month would determine the level of shipments to Korea after that. He said negotiations to alter the agreement last year included “roll-over” provi-

sions whereby Posco would take the remainder of 600.000 tonnes over an unspecified period extending beyond the end of the year. Mr Vernon said that there is no question that ironsand sales to Korea, like those to Japan and Victoria, will continue. N.Z. Steel was the sole supplier of ironsand to Korea, where Posco has the only integrated steel works, and Posco’s credit rating was very high. He said even the discovery by Korea recently of its own ironsand would not affect supply as it is known to be of inferior quality to New Zealand concentrate. Although acknowledging that the future market for ironsand continues to look poor, Mr Vernon said that N.Z. Steel had to be realistic, and accept the vagaries of the steel market. “As the sole supplier to Korea, we have to accept fluctuations,” he said, adding that Posco had kept the company informed on the likely demand.