IRON ore negotiations between Chinese steel mills and suppliers will conclude in around 10 days, a top Chinese steelmaker says.
Price talks: A ship is being loaded with iron ore from a Rio Tinto mine in West Australia's Pilbara region. Picture: Reuters
The vice-chairman of the China Iron and Steel Association, which has been spearheading the talks for the Chinese side, said China won't accept a 33 per cent price cut in iron ore prices.
"You will see an outcome (from the negotiations) in around 10 days," Li Xiaowei, who is also the chairman of Hunan Valin Iron & Steel Group, told reporters in Beijing.
"It's impossible for China to accept the 33 per cent price (cut)."
"Supply and demand rely on each other like teeth and lips. Those who only chase monopoly and windfalls will eventually lose more.”
Mr Li is also chairman of Hunan Valin Iron & Steel Group, which owns just over 17 per cent in Fortescue Metals Group, making it the Australian miner's second-largest shareholder.
Mr Li said China's annual iron ore demand of 450 million tonnes means it should be deciding what price was right for the raw material.
Companies should seek a "China price" and a "China mechanism," Mr Li said, indicating China wanted to set its own mechanism for global iron ore prices.
The 2009-10 contract year iron ore negotiations between Chinese mills and the world's top ore suppliers Rio Tinto, BHP Billiton and Vale have been particularly tortuous this year as both sides have refused to back down on the extent of price cuts.
Already, some Chinese steel mills have agreed to provisional prices for iron ore until a final price is set. As several key buyers adopted a 33 per cent discounted price as the provisional price, it was seen to indicate Chinese steel mills expect it will be the final price to emerge from current talks between government-linked negotiators and major mining companies.
On Hunan Valin's outlook, Mr Li said the company didn't have another overseas merger and acquisition target after it completed its equity acquisition in Fortescue earlier this year.
He added Valin would cut its financial cost by at least 200m yuan ($36m) this year and its profit might reach its highest level for this year yet in August, but didn't provide any figures.
His comments came as Chinalco president Xiong Weiping said he was closely monitoring the development of the Chinese government's investigation into the alleged theft of state secrets by four Rio Tinto employees.
Chinalco is the single biggest shareholder of Rio.
Mr Xiong also said his company was interested in mining assets in Western Australia, especially in the non-ferrous sector.
Mr Xiong said he was also following developments of talks between Anglo American and Xstrata.
"We are closely monitoring this deal, and as a metal and mining group, Chinalco is closely watching the restructuring of the global mining industry," he told reporters.
Source: The Australian
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