South Korea's top steelmaker POSCO said Thursday that it had negotiated a cut in iron ore prices of between 33 and 44 percent with Anglo-Australian mining giant Rio Tinto. The reduction, which will be applied retroactively from April, is similar to an earlier agreement between Rio Tinto and Japan's Nippon Steel, but not as deep as the 40-45 percent drop requested by China's steelmakers.
POSCO, the world's fourth largest steelmaker, said it would buy iron ore for 58.2-68.9 dollars per ton. The group, which imports up to 50 million tons of iron ore annually, has been in talks with major suppliers including BHP Billiton of Australia and Brazil's Vale about prices for the current contract year.
"The deal with Rio will help our company cut costs. We are still in talks with BHP Billiton and Vale," POSCO spokeswoman Choi Youn-Joung told AFP. Iron ore prices have dropped due to weak demand caused by the global economic slump, which forced the South Korean steelmaker to cut production, she said. In early May POSCO slashed prices for steel products by 20 percent for local clients.