(Xinhua)
Updated: 2008-02-23 13:55

RIO DE JANEIRO - Brazil's miner Vale, world's biggest iron ore producer, increased by 65 percent the price of its iron ore fines exported to China's largest steelmaker, the Baosteel company.

Vale, the main supplier of iron ore to China, which is the world's largest steel producer, said on Friday in a statement that Baosteel, which represented all Chinese steel companies in the price negotiations has accepted the new price.

The agreed reference prices with Baosteel this year will be 1.1898 US dollars and 1.2517 dollars per dry metric ton Fe unit produced respectively in the so-called Southern System (Minas Gerais state) and northern Carajas mining complex, Vale said.

Vale stressed that the price rise in relation to 2007 was similar to those applied this year to its clients in Japan, South Korea, Germany and Italy.

The miner also said that the price of exported iron ore will increase from 46.21 dollars per ton last year to 76 dollars in 2008.

"The magnitude of the price increase for 2008 reflects the continuity of very tight conditions still prevailing in the global iron ore market," the company highlighted in the statement.

"The iron ore price settlement with large high-quality companies and traditional customers such as Baosteel is an evidence of our commitment to the benchmark pricing system, respecting the long-term relationship and trust involved in these negotiations," it added.

Vale stressed it "reinforces its commitment to customers" by substantially investing in production capacity, which has expanded at an average annual rate of 14.1 percent between 2001 and 2007.

The company outlined its official target to increase its production capacity up to 450 million tons by the end of 2012 with huge investments in new mines, railway lines and ports.

In 2007, Vale raised its prices by 9.5 percent in relation to 2006.