Rio Tinto will not respond to any unfair tactics when attempting to negotiate a benchmark iron ore price with China, Rio iron ore chief executive Sam Walsh said yesterday.
Speaking at Rio’s Australian investor’s seminar in Sydney, Walsh said all dealing would have to be fair end equitable for successful price negotiations with the Chinese.
“Certainly, if there is any tinge of unfairness in relation to what is being structured, it would make benchmark negotiations very difficult,” he said.
“We need to hear directly from Baosteel and CISA (China Iron and Steel Association) as to exactly what is their view in relation to prices.”
Iron ore benchmark negotiations for 2010 are soon to get under way between Rio and China. The two sides failed to reach an agreement last year after China held out for a larger price cut than was given to other customers such as Japan and Taiwan.
This ultimately led to China having to purchase iron ore on the spot market.
In light of previous failed negotiations, Walsh said that it was possible for China’s pricing system to be different from other customers.
“Any number of scenarios could relate to an outcome in 2010, with one scenario being a different pricing mechanism in China to the rest of the world,” he said.
“In Japan, they are very keen to continue benchmark negotiations and I expect they will be active in negotiations.
“Korea, Taiwan and Europe also see a great reliance placed on it.”