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Rio Tinto to offer portfolio of iron ore pricing- 19 Jun 11

Global miner Rio Tinto will offer a portfolio of iron ore pricing which will include a mix of long-term and short-term contracts and spot sales, a Rio Tinto executive told Reuters on Tuesday.

Vale, Rio Tinto and BHP Billiton dumped a decades-old annual pricing scheme last year in favour of quarterly pricing.

Even shorter term deals look inevitable to many in the industry.

BHP Billiton is already selling some iron ore on a shorter-term monthly basis and would like its contract prices to move even closer to the daily market price. Vale seems determined to stick to quarterly pricing.

Rio Tinto says that as more iron ore comes on stream it is open to be more flexible and will offer its customers a number of options for quarterly or shorter pricing mechanisms.

"We mainly use a quarterly month-lag price," Alan Davies, Rio's president of international operations, iron ore, said on the sidelines of an iron ore conference in Geneva.

"But we accept that some customers may not like it and we are open to discussions with customers on whether to move to shorter contracts," he said. "Customers are being worked with and listened to when setting appropriate pricing mechanism."

Rio Tinto is not currently using iron ore hedging tools.
Jun 19, 2011 08:52
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