NEW YORK (TheStreet) -- BHP Billiton (BHP) will no longer sell iron ore under an annual contract to Asian steelmakers, the company announced Tuesday, effectively bringing to an end the 40-year-old system that had governed pricing of the raw material.

BHP, the world's second-biggest miner of iron ore, came to the agreements with a "significant number" of major steelmakers in Japan and China, the company announced Monday. The move follows word on Monday that Brazil's Vale ( VALE) inked pricing deals with Japan's Nippon Steel and possibly Korea's Posco ( PKX), raising the price of iron ore to $105 a ton, about 90% more than the 2009 level. Vale, too, has persuaded steelmakers to move to a shorter-term contract.

Other reports indicate that BHP and Vale have worked out an arrangement for the current quarter to sell their ore at $110 to $120 a ton, which would be as much as double the 2009 benchmark price.

Vale is the world's largest iron ore miner. Rio Tinto ( RTP), No. 3, has yet to come to a pricing agreement or to drop the annual contract, but is expected to do so soon.

Rio Tinto has been embroiled in a bribery and espionage scandal in China. On Monday, it officially fired four of its China-based executives, who were convicted and sentenced to stiff jail terms for accepting bribes from Chinese steelmakers desperate for iron ore. The former Rio Tinto employees were also convicted of stealing industrial secrets that, a Shanghai judge said, helped the miner artificially inflate the price of iron ore.

The annual pricing system for iron ore had been standard operating procedure since the 1960s. At the beginning of each year, big global miners would begin negotiating with their steelmaker customers. The first pair to strike a deal set the "benchmark," and all other miners and steel companies would fall into line for the rest of the year under that price.

Lately, however, the big three ore miners, BHP in particular, have been pushing for a renovation of the annual system, arguing that shorter-term pricing would be fairer. Steelmakers, many of whom have criticized BHP and Rio Tinto especially for anti-competitive behavior, like the stability of the annual contract, arguing that it's better for the global economy, since volatile swings in the price of iron ore, steel's crucial feedstock, will inevitably effect whatever steel goes into: from autos to building materials to appliances.

The shift in the pricing regime will also impact the dry-bulk shippers that carry the ore from Australia and Brazil to Asia.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.

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