The world's largest and the third-largest iron ore miners Vale of Brazil and Anglo Australian miner BHP Billiton, have made a breakthrough in trashing the old annual iron ore benchmark system by getting the Japanese steel mills to agree to a quarterly system, with Vale managing to get a 90-per cent rate hike for this quarter.
This is an important breakthrough for the miners, especially for BHP Billiton, which has been clamouring for junking the system of annual iron ore contracts.
In a statement, the Melbourne-based BHP Billiton said today that it had reached agreement with a significant number of customers throughout Asia to move existing iron ore contracts that were previously priced annually onto a shorter term landed price equivalent basis.
The world's largest mining company added that the agreements reached were for the majority of its iron ore sales.
Vale, which earned 58 per cent of its 2009 revenues of 28.6 billion from sale of iron ore, today struck a deal with Japan's Nippon Steel and Sumitomo Metal Industries to sell iron ore at $100 to $110 a metric ton for the quarter commencing 1 April.
Nippon Steel is the world's second-largest steelmaker, while Sumitomo Metal is Japan's third-largest steelmaker.