April 9 (Bloomberg) -- Rio Tinto Group, the world's second- largest iron ore producer, is in talks with customers to move away from annual price agreements and switch to quarterly contracts.
No information will be released while negotiations are ongoing, London-based Rio Tinto said in a statement to the Australian Securities Exchange today.
Brazil's Vale SA last week said it agreed with 97 percent of its customers to adopt quarterly iron ore price settlements, abandoning a 40-year-old tradition of setting prices annually. BHP Billiton Ltd., the third-biggest shipper of iron ore, has also agreed to shorter-term contracts. The shift has been criticized by steelmakers.
"Rio Tinto's position reflects the recent structural shift in the iron ore market away from benchmark pricing," Rio's head of iron ore Sam Walsh said in the statement. "It is in line with our recent comments that benchmark pricing only works if it reflects market fundamentals, otherwise the system would need to change."
The World Steel Association said last week it was seeking a review of the iron ore industry after annual pricing was scrapped. The market is uncompetitive because it's dominated by three suppliers, the association said.