rio tinto iron ore sales team arrestd in china, page-24

China accepts 33% iron ore price cut:

reportJuly 8, 2009 - 3:38PM

China's steel mills have agreed to a 33 per cent cut in iron ore prices for six months, lower than the 40 per cent cut they had vowed to win, the China Business News said on Wednesday, citing informed sources that it did not name.

Reuters sources could not confirm the report in the Shanghai-based business newspaper that is backed by a local government agency. If correct, it would mean China's steel sector had conceded to the same price that Japanese and South Korean rivals accepted from Rio Tinto, but for only half the time.

A Rio spokeswoman declined to comment.

Controversy over the negotiations has flared after Chinese authorities detained four members of Rio Tinto's sales team in Shanghai on Sunday. The Australian government continues to seek consular access to the group, which includes one Australian.

The price cut would be effective from April through to October, the China Business News said on its website.

Several steel officials contacted by Reuters said they were unaware of any settlement, but two junior steel mill officials said they had heard of a possible settlement although they could not confirm it.

China agreed to a cut in both Pilbara Blend iron ore fines and Yandi fines of 33 per cent to 97 US cents per dry metric ton unit, and a reduction in Pilbara Blend lumps by 44 per cent to 112 US cents per dry metric ton unit, said the report. The cuts are effective from April through to October, it said.

The China Iron and Steel Association on May 31 rejected the 33 per cent price cut agreed in May between London-based Rio and Japanese, Korean and Taiwan producers, and has been seeking a cut of as much as 45 per cent.

Pilbara blend iron ore is a Rio Tinto product, while BHP Billiton, Australia's biggest iron ore exporter, produces ore from its Yandi mine. Rio Tinto spokeswoman Leith Paganoni said the company doesn't comment on negotiations. BHP Billiton Melbourne-based spokesman Peter Ogden declined to comment.

Baosteel Group Corp.'s chief negotiator, Ding Shouhu, said he's unaware of the report and declined to comment further. Calls to the China Iron and Steel Association weren't answered.

China also agreed to conduct negotiations on a biannual basis with talks for the second half now underway, the newspaper said.

Separately, four of Rio's employees in Shanghai have been detained since July 5 for ''unclear'' reasons, the company spokesman Nick Cobban said yesterday. A Public Security Bureau official in Shanghai and the Foreign Ministry in Beijing declined to comment when contacted by Bloomberg News.


Reuters, with BusinessDay, Bloomberg News