Rio Tinto (ASX:RIO) Sees Fortescue (ASX:FMG) Pricing Not Relevant

Melbourne, Aug 17, 2009 AEST (ABN Newswire) - Rio Tinto Ltd. (ASX:RIO) says the company does not see the pricing agreement by Fortescue Metals Group Ltd. (ASX:FMG) and Chinese steelmakers as relevant to its pricing for fiscal 2009, while the miner conducts its own negotiations with customers worldwide.

On Monday Fortescue announced that it has reached an agreement with Chinese steel mills on iron ore prices that represents a 35% discount from the Anglo-Australian benchmark set last year. It is about 3% below the 97 cents a dry metric ton unit for the same grade that Australian miners Rio Tinto Ltd and BHP Billiton Ltd. (ASX:BHP) agreed with Japanese and South Korean steel makers earlier this year.

Fortescue Chief Executive Andrew Forrest said the iron ore price the miner has agreed with China is fair and equitable. But analysts said it was unlikely this could become an industry benchmark given Fortescue is relatively smaller supplier and that it's ore is of a slightly inferior quality.

Fortescue's price agreement is conditional on the miner securing funding of between US$5.5 billion and US$6 billion from China. The price is valid only for six months, with the terms to be renegotiated after that.