China and the world's largest miners yesterday failed to agree on the annual price of iron ore, pushing the steel and mining industry into uncharted territory and further diminishing the 40-year-old price system known as the benchmark.
Rio Tinto, the world's second-largest iron ore producer, had set a deadline of last night for an agreement, when some of its long-term contracts with Chinese steelmakers expired. The expiration of these contracts now allows the miner to sell the ore at spot prices.
The miners – Vale of Brazil, Rio Tinto and BHP Billiton – have already agreed to cut annual benchmark ore prices by 28-33 per cent for deliveries to steelmakers in Japan, South Korea, Taiwan and Europe in the 2009-10 year. That would equate to a price of $75-$80 a tonne including freight costs.