COLUMN-Iron ore can't go back to the future to annual pricing: Russell
--Clyde Russell is a Reuters columnist. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, Feb 23 (Reuters) - Iron ore should go back to the future and reinstate annual contract pricing, according a former executive of top miner Rio Tinto. He's wrong.
Mal Randall, who spent more than 25 years at Rio Tinto and also helped set up an Australian iron ore miner, said the move to iron ore spot pricing from 2010 onwards was a disaster, the Australian Financial Review reported on Monday.
Up to a few years ago, iron ore had been priced through annual talks between steelmakers and their largely Australian suppliers.
This changed, largely at the behest of former BHP Billiton chief executive Marius Kloppers, who wanted to take advantage of a shortage of supply to generate higher returns for his iron ore mines.
"It was orchestrated and brought in by a guy that has no responsibility now, Kloppers who used to run BHP," the newspaper quoted Randall as saying. "It's great to make these changes and then he's gone."
Randall, who now chairs mineral sands company MZI Resources, is correct insofar as the spot market pricing is no longer working in the favour of the big miners. Continuación...