Iron ore prices will likely rise in 2010, underpinned by growing demand from China, the chief executive of Brazilian mining giant Vale said on Monday, without offering estimates of how much prices could rise.
"I think it's going to be a positive year, and iron prices are showing a tendency towards increase, but I do not know by how much," Roger Agnelli told reporters.Iron spot prices are still some 30% above 2009 contracts on a freight-adjusted basis, a sign of continuing demand for raw materials as the global economy begins recovering from last year's financial crisis.
Prices for much of the seaborne iron are negotiated in benchmarking talks between consumers currently led by China, the world's top iron importer, and the world's top three miners -- Vale ,BHP Billiton and Rio Tinto .
Agnelli said Vale, the world's largest iron ore producer, had not yet started talks with Chinese steelmakers to determine 2010 benchmark prices.
"If you have contracts that are valid until April, there is no reason to accelerate the negotiations," he said.
The 2009 contracts are officially still in discussion but in practice are based on a 33% cut from 2008 prices as offered to South Korean and Japanese steelmakers.
Talks fell into disarray after China arrested top officials from Rio Tinto on charges of espionage. The company denies any wrongdoing.
Agnelli said Vale will insist striking workers at its Voisey's Bay nickel subsidiary in Canada accept a uniform benefits package that links bonuses to merit and not to market prices for nickel -- a concession union leaders won several years back.
"We made a balanced proposal that didn't harm workers rights," he said. "We're preparing the company for the future and the future is ... a very competitive market."
Vale said in a statement that the union "was a "no-show" this morning at a negotiation meeting arranged by the Conciliation Officer appointed by the Ministry of Labor which they had previously agreed to attend."
Reuters was unable to immediately reach union leaders for comment.
Voisey's Bay workers went on strike on Aug. 1, shutting that operation down in a dispute over bonuses and pension payments.
Last month Voisey's Bay union leaders said they would not resume talks until Vale opened discussions with workers at Sudbury, another Vale nickel operation in Canada, that went on strike around the same time.
Vale, which has described its Canadian nickel production as the highest-cost operations of its global portfolio, insists the two negotiations are separate.
Agnelli said despite a market consensus for higher iron prices, mining companies are worried about the weakening of the U.S. dollar.
"I think there's been a strong impact on costs as a result of the declining value of the dollar," he said. (Reporting by Brian Ellsworth and Denise Luna; Editing by Christian Wiessner)