Rio, mills agree to 95% hike in iron ore

June 10, 2008

June 10th (The Age) – Rio Tinto, the world’s second largest iron ore producer, has reportedly agreed to a 95 per cent price hike for the steel-making commodity for small Chinese mills.

Although the small chinese steelmakers have reportedly accepted a 95 per cent price rise, larger steel mills will not accept an increase above 85 per cent, an unnamed source told Reuters at a conference in Singapore.

Rio Tinto is pursuing a premium price for its iron ore from the Pilbara region of Western Australia on the premise that it is cheaper to export to Asia than other regions such as Brazil.

“We don’t provide ongoing commentary on pricing, suffice to say negotiations are continuing,” Rio Tinto spokesman Gervase Greene said.

Brazilian giant Vale, the world’s largest producer of iron ore, has already agreed with steelmakers to a price rise between 65 per cent and 70 per cent for its ore in 2008.

Vale’s settlement would be accepted generally by producers and steelmakers as the benchmark contract price for the year, but Rio Tinto and rival BHP Billiton Ltd have held out for the premium.

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