China on warpath again ahead of 2010 iron ore price negotiations
31 December 2009
China is gearing up to gamble once again by opting for a hard line in the 2010 iron ore annual contract price negotiations with the big three global iron ore-mining giants. China has so far failed to cut a deal in the acrimonious and protracted price negotiations over the year.
China's aggressive steel industry trade body, The China Iron & Steel Association (CISA), has already fired the first volley by saying that global mining giants are seeking a price increase for the 2010 iron ore annual contract of 20-30 per cent, which brings the talks expected to start in April, to "a large degree of difficulty."
CISA vice-chairman Luo Bingsheng, in an interview with the China Securities Journal, said that the proposed price increases would once again complicate negotiations with the Anglo Australian mining giants BHP Billiton and Rio Tinto and Brazil's Vale.
China's leading steel maker Baosteel has once come back to head the negotiations this year after CISA, which was the lead negotiator for Chinese steel mills in the failed talks to fix long term iron ore prices with global miners for 2009.
China, which was seeking 2009 price cut of 40 per cent as the worldwide demand for steel collapsed in the wake of the global recession, (See: Chinese steel makers to demand 40 per cent cut in iron ore price) mining giants, led by Rio Tinto were willing to offer a price cut of only 30 per cent.
The negotiations came to a halt after Chinalco's $19.5-billion investment to double its stake in Rio Tinto was terminated by the Anglo Australian miner in June, (See: Rio terminates Chinalco deal; to raise $15.2 billion through rights issue) and the arrest of Rio Tinto's Stern Hu, the lead negotiator in settling the 2008 iron ore contracts and three other employees in Shanghai on bribery charges and industrial espionage in July. (See: China arrests four Rio Tinto employees).