New York: Steelmakers are fighting back over attempts by the $200 billion (Dh734.3 billion) iron ore mining industry to raise the cost of their main raw material, calling for regulators to investigate an "oligopoly" that inflates prices.
Mining of iron ore, essential for making steel, is dominated by Vale SA, Rio Tinto Group and BHP Billiton Ltd, which control about two-thirds of the trade. Brazil's Vale, the largest supplier, set a precedent last week by breaking a 40- year custom of selling ore on a yearly contract at a fixed rate and won a 90 per cent price increase from Japanese mills.
"There is an urgent need, now a very urgent need, for the competition authorities around the world to examine the market for iron ore and the market behaviour of the three companies who dominate the business," said Nicholas Walters, spokesman for the World Steel Association. The 180-member group includes 19 of the top 20 steelmakers and makes up 85 per cent of global output.
Vale said Thursday it agreed with 97 per cent of its global clients to adopt quarterly price contracts.
Talks, which started late last year between Chinese steelmakers and the three iron ore suppliers, are still on, He Wenbo, general manager of Baosteel Group Corp that is representing Chinese steelmakers in the talks, said Thursday. "Negotiations with iron ore producers are very difficult. The annual pricing system is a better way to ensure a win-win solution for steelmakers and miners," He said.
