September 07, 2008

Iron ore price negotiations –BHPB chairman on charm offensive in China

The Australian Financial Review reported that Mr Don Argus chairman of BHP Billiton recently had discussions with Mr Wen Jiabao premier of China and other officials from key ministries, in a bid to reach an agreement over the scrapping of benchmark pricing settlements for iron ore.

Mr Argus told Chinese business magazine Caijing that the benchmark system was detrimental to producers and consumers and also refuted allegations by China Iron and Steel Association that some Australian suppliers had diverted contract ore to boost spot market sales.

Mr Argus told Caijing that "We did not and we will not betray our contract obligations.”

According to the paper, Mr Argus also used the talks to allay Chinese fears over BHP Billiton's hostile takeover bid for rival Rio Tinto as China has raised concerns that the takeover would reduce the number of suppliers to the market and further drive up iron ore prices.