Vale loosens payment policy while iron ore price talks continue
Published: Monday, April 20, 2009 15:44 (GMT-0400), by Business News Americas staff reporters
Brazilian miner Vale (NYSE: RIO) said it has added flexibility to its iron ore contracts to now take payment on 80% of its sales in cash and 20% on forward sales, as long as 2009 benchmark price negotiations continue.
Vale is presently in the midst of price talks with Asian steelmakers on prices the market expects will be considerably lower than last year's amounts due to the drop in demand caused by the global financial crisis.
Analysts have said they expect Vale to agree to as much as a 40% discount in its iron ore sales to Asians this year.
The Brazilian company's two main competitors in the iron ore market, BHP Billiton (NYSE: BHP) and Rio Tinto (LSE: RIO), are expected to concede to similar discounts.
Rio de Janeiro-based Vale is the world's largest producer of iron ore.
