A pioneer of overseas resources purchasing, Sinosteel Corporation finds itself in a dilemma. Its contract with Hamersley, an iron ore subsidiary of Rio Tinto, on Australia's Channar iron ore mine is due to expire and Rio Tinto is asking for a resource and service fee of US$10 per ton as a condition of renewal.

Channar, with an output of 12.5 million tons a year is an important source of profits for Fortune 500 company Sinosteel. Channar is also one of China's earliest and most successful overseas resources projects.

If Sinosteel accepts the terms offered by Rio Tinto, the company's profits from the project may be wiped out, and would even risks losses if the iron ore price drops in the future.

Midwest, another Australian iron ore project backed by Sinosteel is still under construction and requires considerable additional investment.

China's business press carried the story above on Thursday. China.org.cn has not checked the stories and does not vouch for their accuracy.