For 40 years the mining and steelmaking industry set the price of iron ore according to the following system: the first agreement each year between a global miner and steelmaker set a benchmark that the rest of the industry followed.
After several attempts to introduce changes since 2007, the system broke apart last year. Vale of Brazil, Rio Tinto and BHP Billiton, which account for the bulk of iron ore sales, agreed to a 33 per cent reduction with Japan, but China rejected the “benchmark” deal, arguing for a deeper price cut.
