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BHP/Rio iron ore jv won't affect pricing

Reuters | Fri, 05 Jun 2009 08:58
[miningmx.com] -- A tie up between world No. 2 and No.3 iron ore miners, Rio Tinto Ltd/Plc and BHP Billiton Ltd/Plc, is unlikely to trigger a change in the controversial annual benchmark pricing, BHP's chief executive said on Friday.

Marius Kloppers told a media conference BHP continued to endorse a move to price indexing of iron ore over a once-a-year mechanism that sets prices through negotiations, but said he was not expecting a sudden change in pricing.

At stake is how the around $88 billion a year of seaborne iron ore is priced. BHP has stood alone in pursuing the demise of current benchmark pricing, saying a continually adjusted price for iron ore better reflects market fundamentals.

BHP's drive to dismantle benchmark pricing suffered a setback last week when Japanese and Chinese steel mills agreed to another year of fixed pricing.

Chinese mills, representing the lion's share of growth in iron ore sales for BHP, Rio and the largest miner, Vale have so far refused to adopt the Japanese and South Korean terms, which call for a 33 percent price drop over last year.

Rio earlier on Friday said it was dumping plans for a $19.5 billion tie-up with China's Chinalco and agreed to set up an iron ore joint venture with BHP.

China Iron and Steel Association, the country's lead negotiator in bechmark price talks, has repeatedly opposed an iron ore index.




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