Rio cuts iron ore price by 33-44 per cent

02 June 2009

Rio Tinto PLC, the world's second-largest iron ore producer, has agreed on a price cut of about 33 to 44 per cent for its iron ore with most of its big steel-making customers in Asia, including South Korea's POSCO, and Taiwan's China Steel and Dragon Steel Corporations.

Last week, the company had reached the same terms with Japan's Nippon Steel Corp.

But Chinese steel-makers, the largest consumers in the world, are calling for a bigger reduction in price, saying they will make losses at the price Rio is proposing.

"Each year the pricing negotiations are tough, and this year is no exception, although the situation is becoming clearer as more customers settle to the same terms," Rio Tinto's iron-ore chief executive, Sam Walsh, said in a statement on Monday.

"We continue to negotiate with our remaining customers, the bulk of whom are in China," Walsh said.

Chinese news agency Xinhua reported that industry industry group, The China Iron and Steel Association (CISA), earlier said that it would not agree to the same terms as it would increase the losses of Chinese steelmakers.