Brazilian mining giant Companhia Vale do Rio Doce (Vale), in compliance with a determination of Brazil's Comissâo de Valores Mobiliârios (CVM), has announced that it is currently holding negotiations for the convergence of iron ore reference prices to the same levels previously agreed to be paid by European customers.
According to Vale, Asian steelmakers pay between 11-11.5 percent less than their European rivals, depending on the grade of iron ore.
On the one hand, Vale said that the conclusion of negotiations would not necessarily mean the iron ore prices will increase; on the other hand, the miner said, in the event that it succeeds in achieving price convergence, the change will lead to an estimated revenue increase smaller than three percent of Vale's total revenue for the twelve-month period ending June 30, 2008. The company's annual revenue was $35.5 billion in the last financial year.
As previously reported by SteelOrbis, on September 3 some media sources stated that Vale issued Chinese steel customers with a supplementary contract, increasing the benchmark iron ore prices for 2008, which were originally negotiated in February, by around 20 percent. However, the very next day these reports were denied by Vale, who at the time said it is in constant dialogue with clients with the purpose of setting satisfactory mutual conditions for commercial contracts.