Forecast production from Fortescue Metals' $3.7 billion Pilbara iron ore project is now fully sold after China's biggest steel maker, Baosteel, signed a supply agreement covering a game-changing 20 million tonnes a year.

Speculation about the agreement has been behind Fortescue's recent share price strength, with the 34 per cent price surge in the past 11 weeks carrying the value of the personal stake of the group's founder and chief executive, Andrew "Twiggy" Forrest, to more than $2 billion.

And in an add-on that will make the incumbent Pilbara iron ore producers BHP Billiton and Rio Tinto groan, the agreement provides for a "broad strategic relationship between the companies".

"Under this strategic relationship, Fortescue will preferentially seek out other opportunities with Baosteel to the mutual benefit of both parties."

The supply deal with Baosteel initially covers 5 million tonnes a year, or about 11 per cent of Fortescue's "stage one" production of 45 million tonnes a year.

First production is due in March next year but the schedule is under pressure following delays forced by cyclone George.

Two workers at a railway construction camp for the project were killed and 16 injured when the cyclone devastated portable accommodation at the camp.

Baosteel's deal with Fortescue envisages it will buy a further minimum 11 million tonnes a year and up to a maximum of 15 million tonnes a year.

That is out of a possible 25 million tonnes a year that Fortescue could expand beyond its initial target of 45 million tonnes a year.

Baosteel's direct entry into the Pilbara iron ore business has been sweetened by the formation of a joint venture with Fortescue potentially to develop a 1 billion-tonne low-grade iron ore deposit close to the new railway being built between the mine at Cloud Break and Port Hedland.

But there is no sweetheart deal on iron pricing, with the agreement based on the annual industry benchmark pricing for premium Pilbara iron ore.

Fortescue traded last Thursday at $22.70 a share. It was suspended from trade pending last night's announcement.