BHP Billiton smashes tradition and agrees iron ore spot pricing

BHP BILLITON yesterday claimed a victory in its campaign to change the way iron ore is priced, as it announced that almost 30 per cent of its sales this year will be determined by prices on the spot market.<br /><br />The world&rsquo;s largest miner broke over 40 years of industry tradition &ndash; where iron ore prices are set annually in behind-closed-doors discussions between steelmakers and miners, resulting in uniform prices and long-term contracts &ndash; by agreeing that a portion of prices will be based on a mixture of quarterly, spot and index pricing.<br /><br />BHP chief executive Marius Kloppers has long been pushing for regular reviews of prices to reflect market movements during the year. Spot prices are typically higher than annually agreed benchmark prices.