Carpentaria Exploration signs up Chinese customer for Hawsons iron ore

THE BOURSE WHISPERER: Carpentaria Exploration (ASX: CAP) has signed a non-binding letter of intent (LOI) with independent commodities trading house Gunvor Singapore for the purchase of one million tonnes per annum (mtpa) of Supergrade from the company’s 62 per cent-owned Hawsons iron project.

Carpentaria explained the new LOI targets supply to smaller Chinese steel mills.

It also follows recent LOIs the company has signed with blue-chip Japanese trading house Mitsubishi Corporation RtM and Middle Eastern DR pellet maker Bahrain Steel, resulting in 50 per cent of initial planned production from the project being assigned to high-value direct reduction (DR) markets in the Middle East and to blast furnace markets in China and the Asia-Pacific.

Under the LOI, the parties intend to develop binding offtake arrangements, initially for a 10-year term, with first supply targeted in 2020.

“The early success of the company’s international marketing campaign highlights that the product is attractive across key markets, buyers are willing to support new independent supply and that future demand will be strong,” Carpentaria Exploration managing director Quentin Hill said in the company’s announcement to the Australian Securities Exchange.

“This latest LOI with Gunvor, another international blue-chip company, is another step in project development, product acceptance and investment attraction.

“The addition of this LOI, our first focused on the Chinese market, demonstrates the clear commercial advantages that Hawsons product quality and the location close to key markets provides.

“It also demonstrates that Hawsons is ideally suited to meet international demand for high-grade and DR pellet feed and pellets that is forecast to increase over time as the global steel industry shifts focus to higher productivity and cleaner, more efficient operations.”