BHP agrees price deal for coking coal

SYDNEY - Mining giant BHP Billiton says it has reached terms for much of its coking coal sales for 2010, involving switching to "shorter-term market based pricing".

"BHP Billiton today announced it had reached terms for a significant portion of its hard coking coal volumes for 2010, based on a structural change to shorter-term market-based pricing for the contract period," the company said.

BHP said agreement had been reached with a range of customers throughout Europe, China, India and Japan. "These settlements reflect the company's commitment to achieving market clearing prices over time across all its bulk commodities," BHP said.

At the company's half-year results briefing last month, BHP Billiton chief executive Marius Kloppers said the spot market was the "best indicator" of supply and demand.

"I always point people back to where is the market today as the best indicator of what the supply and demand is and ... what expectations should be on where prices are heading," Kloppers said.

The spot price of coking coal has risen to about US$220 ($314) a tonne, well above last year's contract price.

Bloomberg reported on March 5 BHP Billiton had won a 55 per cent price increase for coking coal from Japan's JFE Holdings's steel unit.

JFE will pay US$200 a tonne for a 3-month contract starting April 1, a company spokesman said.

The price settlement for last year's coking coal contract, which runs out at the end of the Japanese fiscal year on March 31, was for US$130 a tonne.

- AAP