Centrex Metals has signed binding Heads of Agreement with Shenyang Orient Iron and Steel and Baotou Iron and Steel to supply hematite from the Wilgerup iron ore deposit on South Australia"s Eyre Peninsula.

Under each agreement Shenyang and Baotou have committed to buying 1 million tonnes of hematite ore per year for five years with the price agreed as the long-term international benchmark price.

Each Heads of Agreement includes the provision to increase the period of the agreement subject to the delineation of further reserves of hematite.

Shenyang Orient Iron and Steel is a privately-owned, fully integrated, medium-sized steel producer with main production facilities in Shenyang City, Liao Ning Province and Jixi City, Heilongjiang Province in China. The company has more than 10,000 employees. Shenyang has its own iron ore mines and has coal mines, coke ovens, a sintering plant, a pig iron plant and steel making and rolling facilities. Shenyang Orient produces two million tonnes of crude steel per year, and is expanding capacity to three million tonnes by early 2007. Its main products are pig iron, steel billets, strip steel and metallurgical grade coke.

Baotou is part of the Baogang Group based in Inner Mongolia and is the 10th largest steel producer in China. It produces more than 8 million tonnes/year of steel products with assets of about 30 billion yuan (approx Aus$5 billion) and more than 300,000 employees.