perhaps this may have been an influence.sign on at netwealth &...

perhaps this may have been an influence.

sign on at netwealth & receive the email before mkt opens.

BHP, Rio seek top dollar for iron ore
Andrew Trounson
January 07, 2005

RIO Tinto and BHP Billiton negotiators will next week be pushing for massive price hikes on iron contracts worth billions of dollars when they sit down in Tokyo for third-round talks with Japanese steel mills.

With Australian analysts tipping a price rise of around 30 per cent, the biggest in 25 years, Japanese newsletter Tex Report yesterday predicted "heated discussions" at the January 12 meetings with the steel mills crying poor.

The steel mills, led by Nippon Steel, last year twice rejected proposed annual price increases believed to be as high as 40 per cent.

Despite steel prices rising about 60 per cent last year, the Japanese industry is smarting because hard coking coal prices more than doubled to $US125 ($164) a tonne late last year, and will be demanding some leeway from the two big Australian producers and the other dominant supplier, Brazil's CVRD.

Tex reported that Nippon Steel president Mimura Akio voiced serious concern over the coal price hike in New York this week, noting that raw material price rises last year cost the industry Y700 billion ($8.8 billion).






The price of iron ore "fines" rose by almost 19 per cent last year, and a 30 per cent hike for the Japanese fiscal year starting April 1 would mean a hike of about $US11 to about $US47.50 a tonne.

There is talk that the Japanese are likely to resist settling in the hope that Arcelor -- a major steel maker based in Luxembourg -- will be able extract a more tolerable price from CVRD during talks in on European prices.

Apart from Rio and BHP Billiton, the increase will set the benchmark for more leveraged smaller producers such as Portman Mining and Mount Gibson.

Portman shares jumped 18c, or 6.4 per cent, to $3.01 amid speculation of iron ore price hikes of 35 per cent or more.

Portman shares have also been helped by the exit from its register in December of unwanted suitor Consolidated Minerals. ConsMin had built a 15 per cent stake in Portman in the hope of securing a merger, but faced with Portman's lack of interest, the stake had become a weight on the share price.

Portman managing director Barry Eldridge wouldn't comment on prices other than to say he had "confidence in our three big brothers (Rio, BHP Billiton and CVRD)".

Portman is in the middle of a $55 million expansion of its Koolyanobbing mine in Western Australia, where production is set to rise to 8 million tonnes a year by late 2005, up from 5 million tonnes.

Mr Eldridge said the company was on track to finalise five-year sales contracts with Japanese and Chinese buyers by February.

While other miners are cutting equity deals with Chinese and Japanese buyers anxious for direct access to supplies, Mr Eldridge said Portman had no plan or need to sell stakes to customers.

Meanwhile, shares in Mount Gibson rose 2.5c to 30c after it said production at its Tallering Peak mine in Western Australia was ahead of schedule.