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"The term pricing system of the past 40 years is not very suitable for the development of steel and iron ore," Xu Lejiang said in a speech at an industry conference.
"Adjustments would be reasonable."
China's steel mills are in talks with global mining giants, including BHP Billiton (BHP.AX: Quote)(BLT.L: Quote), Rio Tinto (RIO.AX: Quote) and Vale (VALE5.SA: Quote), on this year's iron ore supply contracts.
Top iron ore miner Vale said it has implemented a more flexible pricing system for iron ore, shifting from the decades-old benchmark system amid reports it is seeking to more than double ore prices in 2010.
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