Frbiz.com Reported Big Miners Shun China During Iron Ore Price Talks

Global miners have sidelined China, their biggest customer

, in the annual iron ore price negotiations because of political gridlock over the resource in the industry and government and fears about retribution if the talks collapse.

Vale of Brazil, Rio Tinto and BHP Billiton, the big operators that mine iron ore in Australia, are talking instead to Japanese customers to reach a benchmark agreement that they can present to Beijing on a "take it or leave it" basis.

The move to sideline Beijing is remarkable as China is by far the world's largest iron ore importer, accounting for over 50 per cent of the seaborne market.

The miners have so far held no substantive negotiations with the Chinese side, led by Baosteel, the big state-owned steel mill, according to people familiar with the talks. They added that there were no plans to travel to China for talks, meeting instead in Singapore.

One executive said: "As far as I am concerned, they [the Chinese negotiators] could come over to Australia if they want to talk."

The Chinese side has been hamstrung by internal disputes between steel companies and the industry association over how to manage any talks and a price they should agree on.

Prospects for a deal this year have been further complicated by the detention last July of Stern Hu, Rio Tinto's former iron ore executive in China, along with three other employees of the Anglo-Australian miner, on charges of obtaining commercial secrets.

The Australian government said yesterday that Mr Hu's case has been referred to the prosecutor to decide whether or not he and his colleagues will stand trial.

Under Chinese law, the prosecutor has 45 days to decide, said Tao Wuping, lawyer for Liu Caikui, one of the Rio employees detained.

Legal sources said they expect that even though Chinese law allows for the possibility the men will be released, they are more likely to be charged and brought to trial, any time from the end of February.

The miners hold the upper hand in the negotiations after the cost of iron ore on the spot market surged last week to a 1?-year high of $131.20 a tonne.

Excluding freight costs, spot prices are more than 90 per cent above the $61- a-tonne level agreed in the 2009-10 contract talks.

by: Frbiz

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