The 2010 annual iron ore benchmark price negotiations between the big three miners and China is heading for a repeat of last year's collapse as the world's biggest iron ore miner, Vale SA of Brazil, has walked out of the 2010 talks with China after the Chinese steel mills rejected its 90-per cent increase, according to Chinese media reports.
As Chinese steel mills rejected Vale's proposal outright, Anglo Australian miners, BHP Billiton and Rio Tinto have also walked away from the talks.
Not only is Vale seeking a 90-per cent increase in the 2010 contract prices, but the miner, which produces nearly 15 per cent of the global iron ore output, also wanted to scrap the annual contract in favour of quarterly contracts.
In 2008, Tinto in raising contract prices by 97 per cent (See: Rio hikes iron ore contract prices for Asian steel mills by 97 per cent ) enabling BHP and other mineroing giants to follow.
Taking the lead in the negotiations from last year's lead negotiator Rio Tinto, Vale had proposed a 90-per cent increase in lower quality ore fines and a 100-per cent increase in higher quality ore lumps and pellets.
In February, Vale had called BHP Billiton and Rio Tinto to join it in dumping the 40-year old system of annual contract pricing in favour of spot prices, also mooted by BHP Billiton in the last two years. (See: Vale, Rio Tinto, BHP seek to dump contract pricing)