Commodity trading giant Vitol has agreed a first-of-its-kind US$240mn iron ore pre-payment facility with a subsidiary of Brazilian mining company Companhia Siderúrgica Nacional (CSN).
Vitol says it will provide funding to CSN Mining International in exchange for lifting around six million tonnes of iron ore over a four-year period.
Vitol, one of several traditionally energy-focused commodity traders to increase its presence in the metals market over the past year, says the facility is its first multi-year financing arrangement in the sector “and highlights the company’s commitment to its growing metals business”.
The agreement is also the latest in a series of mining pre-payment facilities provided by large commodity traders, rather than traditional financial institutions – a trend driven in part by an anticipated supply shortfall over the next decade.
These arrangements allow cash-rich traders to secure longer-term access to raw commodities, while also deploying their market expertise.
“We are pleased to broaden the scope of our relationship with CSN through this long-term arrangement which deploys Vitol’s financial, logistics and trading capabilities in the iron ore market,” says Derek Wilson, Vitol’s global head of steel raw materials.
“We look forward to expanding our presence in this important market and across the entire steelmaking value chain.”
