Winsway forays into iron ore procurement

Hong Kong-listed Winsway Coking Coal has entered into a long-term strategic alliance with Lung Ming Mining for the marketing of Mongolian iron ore in China.

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This is Winsway’s first foray into iron ore, and comes after the coking coal trader posted a $70 million net loss during the first half of this year, on weaker demand for the steelmaking raw material.

Winsway aims to “diversify its product offering and mitigate the risks from [relying on a] single product”, it said in a statement released on Wednesday August 22.

According to the terms, Winsway will be the exclusive buyer of Mongolian iron ore products produced by Lung Ming and the latter will be responsible for the delivery to Erlianhaote (Erenhot) in Inner Mongolia.

Winsway, on the other hand, will arrange customs clearance, warehousing, logistics and sale of the iron ore in China utilising its logistics capacity and marketing abilities.

The target volume of supply is estimated to be 2 million tonnes for the rest of 2012, with an increment to 30 million tpy in 2017 and onwards, the statement noted. The purchase price will be mutually agreed upon once every month.

The agreement guarantees 25 years of iron ore supply from Lung Ming and may be renewed.

Lung Ming is one of the largest producers of iron ore in Mongolia, operating two mines covering approximately 14 square kilometres in Eruu soum, Selenge province, according to the statement.

Mongolian miners shipped 3.23 million tonnes of iron ore in the first seven months of this year, up 24% year-on-year, according to Chinese customs figures released on Wednesday.

The volume in July was 307,541 tonnes, or 134% higher than a year earlier.