BHP Billiton Cutting Some Ore Prices

SYDNEY (AP) -- BHP Billiton Ltd., the world's biggest mining company, said Wednesday it has agreed to sell 23 percent of its contracted iron ore at a one-third discount to last year's prices.

The Melbourne-based company said in a statement that another 30 percent of its iron ore will be sold based on a mix of quarterly negotiated pricing, spot market and index-based pricing.

"Negotiations for the remaining 47 percent of iron-ore volumes are ongoing," the company said.

BHP Billiton -- the world's third-biggest producer of iron ore -- did not reveal which of its customers had agreed to the price cut.

China consumes up to 60 percent of global iron ore supplies and wants even deeper price cuts after two years of steep increases. Although steel mills in Japan and South Korea recently agreed to a 33 percent cut in iron ore prices, Chinese news reports and industry analysts have said Beijing wants a 40 percent cut.

Tensions during iron ore price talks with Chinese steel mills were heightened when China detained four employees of rival miner Rio Tinto Ltd. on July 5. They are accused of paying bribes to obtain confidential information on China's negotiating stance.

Chinese state media said the Rio employees -- including an Australian -- are accused of bribing Chinese steel company employees to obtain confidential information on China's negotiating position in the talks.

Martin Ritchie, Asia editor of the Metal Bulletin journal, said China might welcome a move toward prices being set every quarter.

"This is the first confirmation that we've got that there is a strong chance of a quarterly price mechanism and that might suit the Chinese a bit more than the benchmark system or the current annual contract system or the spot market," Ritchie said.

"I think what everyone is trying to work out is whether this 47 percent applies to China; China hasn't agreed a price with BHP Billiton yet as far as we know," he said.