Baosteel Group Corp has signed a 10-year purchase pact with Fortescue Metals Group Ltd under which the Australian miner will supply up to 20 million tons of iron ore a year, the company said on Mar 27, 2007. [newsphoto]

Through the deal, Shanghai-based Baosteel will initially buy five million tons of ore a year, or 11 percent of Fortescue's planned annual output of 45 million tons from its operation in Western Australia. The top Chinese steel maker agreed to purchase another 11 million to 15 million tons a year after Fortescue's output expands, Fortescue said in a statement released on Monday. Iron ore is the raw material used in steel making.

The two companies also signed a memorandum of understanding to form a joint venture to explore and develop magnetite, another iron ore product, in Western Australia.