Rio Tinto has reached a verbal agreement on a new annual iron ore supply contract with China Mineral Resources Group (CMRG), the state-owned entity representing Chinese steel mills, according to sources. Some steel mills have been verbally notified of the deal, but further details have not been released.
The agreement could provide stability for a significant share of Rio Tinto’s revenue in its largest market. Its terms may also set a benchmark for negotiations between other major iron ore producers and China’s centralized buyer.
Confirmation of contracted tonnage is seen as removing a tail risk for Rio Tinto, whose share price is heavily influenced by the iron ore index.