China baulks at iron ore price rise

European steel groups also accuse iron ore miners of threatening recovery

Chinese steel authorities attacked attempts by iron ore miners to increase annual prices by as much as 90 per cent yesterday, echoing earlier comments made by a European trade body, which said that groups such as Rio Tinto and BHP Billiton were threatening the economic recovery.

The China Iron and Steel Association (Cisa) said that it shared Eurofer's "outrage" that groups such as Rio, BHP and Brazil's Vale were calling for a 80 to 90 per cent increase during price negotiations.

"On the afternoon of 11 March Eurofer made a statement on its website strongly opposing the intention of iron ore producers to raise prices by 80-90 per cent," Cisa said. "The China Iron and Steel Association expresses its approval and support for this statement."

Last week Eurofer said it was "outraged" by the miners' attempts to "massively increase" iron ore prices, adding that "this will reduce demand for many price-sensitive products and therefore slow economic recovery or even push economies back into recession".

Rio Tinto and BHP Billiton refused to comment yesterday. Cisa's statement follows its calls for the issue to be discussed at a political level.

Benchmark prices are set annually after talks between the miners and individual steel mills. Last year, Chinese mills refused to accept a 33 per cent increase agreed by Korean and Japanese mills, insisting on a 45 to 50 per cent discount. No deal was ever agreed.

On 10 February, Marius Kloppers, BHP's chief executive, said that the iron ore spot price should form the basis of the negotiations and that it is now "very close to 100 per cent above where the benchmark price is today". Cisa said at the end of last year that a 20 per cent increase would be more appropriate.

Cisa's comments will sour what had been a good day for Rio Tinto after tensions with its biggest shareholder, Aluminium Corp of China (Chinalco), eased when reports emerged that the two are close to agreeing a deal on a $12bn iron ore joint venture in Guinea, West Africa.

The relationship between Rio Tinto and Chinalco, which holds a 9.3 per cent stake in the group, have been severely strained since June last year when the Anglo-Australian miner rebuffed a bid that would have taken the state-owned Chinalco's stake to 18 per cent, in return for a $19.5bn investment.

The proposed deal upset a number of the company's smaller shareholders, forcing Rio to pay as much as $200m in break fees, and give up on a deal that would have helped the group to cut its then burgeoning $20bn debt pile. Rio has since sold off a number of assets.

While the two parties have not finalised an agreement, Chinalco spurred the talks on Monday, when its Vice-President, Lu Youging, said the group was looking for overseas deals. "Chinalco's strategy is to be an international multi-metals mining company. To achieve this goal, we are constantly seeking fair and mutually benefiting opportunities in the international market," Mr Lu said.

Rio shelved plans to develop the Simandou iron ore project in Guinea last year after commodity prices slumped in the wake of the economic downturn. The group has described the Simandou site as the biggest undeveloped iron ore deposit in the world. Two years ago, Rio said that it would cost $6bn to develop the project, although analysts believe the cost has now probably risen to twice that amount.

Rio Tinto is desperate to get on better terms with the Chinese after a year that tested its relationship with what is one of its biggest clients. Soon after Rio walked away from the deal with Chinalco, four of the group's employees, including the Australian national Stern Hu, were arrested on suspicion of stealing Chinese state secrets. The four were formally indicted on the lesser charges of bribery and commercial spying earlier this year. Rio Tinto has refused to comment on the case.

Suggested Topics
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Popes current and former won't be watching the football together
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Mick Jagger performing at Glastonbury
ebookA unique anthology of reporting and analysis of a crucial period of history
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child