Word that the Aussie mining giant Rio Tinto ( RTP) agreed to cut iron-ore prices by a third in a deal with Nippon Steel, the big Japanese producer, helped push shares in mining stocks higher Tuesday morning, as industry observers had been looking for an even sharper reduction in prices. Viewed as the benchmark for global ore pricing, the new contract likely will lead other ore producers and steelmakers to follow suit. The contract between Rio and Nippon, the result of months of negotiations, is part of the process by which the world's three big iron-ore miners -- Rio, BHP Billiton ( BHP) and Brazil's Vale ( VALE) -- and the steel industry in Japan, Korea, Taiwan and China set their prices year-by-year. Still, there was resistance in China to the fresh Rio-Nippon contract. According to a Dow Jones Newswires report, industry officials in China said they remain steadfast in their demand for a 40% reduction in iron ore prices for 2010. The officials also said that the 33% cut left prices higher than current spot prices for iron ore in China. Rio agreed to sell lesser-quality fine ores at 97 cents for each dry metric ton unit, down from almost $1.45 last year. Prices for higher quality ores, according to the contract, were cut by nearly 45% to $1.12 a ton.
Meanwhile, the head of Rio's iron ore unit, Sam Walsh, said in Australia on Tuesday that he saw a bottoming out in demand for raw materials in China. In New York, Rio Tinto's American Depository Receipts were trading up $2.55 at $176.39. The company's one-time takeover target, BHP Billiton, saw its ADRs climb 42 cents to $34.29. Vale ADRs, meanwhile, were up 9 cents to $18.80.