maybe this is chinas way of busines

Rio Asks Chinese Mills for $9 Billion Compensation, Herald Says

DeliciousDiggFacebookLinkedInNewsvinePropellerYahoo! BuzzCloseShare | Email | Print | A A A

By Bloomberg News

July 11 (Bloomberg) -- Rio Tinto Group asked Chinese steelmakers for compensation of as much as $9 billion in late June for breaking supply contracts, the 21st Century Business Herald said, citing an unidentified industry official.

Rio Tinto claimed that Chinese mills delayed or canceled iron ore shipments for eight months, causing an aggregate loss of $5 billion in the supplier’s iron ore business and another $4 billion in ship leasing costs, the report said. BHP Billiton Ltd. also asked the Chinese steelmakers to compensate with an unknown amount, the newspaper said.

Rio wants to continue talks for iron ore supply contracts only with the mills that have honored their agreements by more than 90 percent, the report said. Those who have failed to do this need to compensate before continuing the contract talks, the newspaper said. A global crisis since the third quarter last year caused steel orders to plunge, making Chinese mills unable to honor their iron-ore purchase agreements, the report said.

“We don’t comment on price negotiations or commercial contracts,” Peter Ogden, BHP Billiton’s Melbourne-based spokesman, told Bloomberg News by phone today, when asked about the report.

“Rio Tinto does not comment on market speculation,” Amanda Buckley, a spokeswoman with Rio Tinto, said in an e-mail replying to a Bloomberg News query on the report.

--Helen Yuan. Editor: Alan Soughley

To contact the Bloomberg News staff on this story: Helen Yuan in Shanghai at [email protected]