Iron hand
Iron ore giants Rio Tinto and BHP Billiton announced that they had come to agreements with key Chinese steelmakers, agreements that hike the base price of iron ore by 86% over a year ago. The combination of ever increasing demand, especially from China and India, along with the power that the three-company iron oligopoly has over the much more competitive steel industry did the trick. Iron ore is a sellers market, and there are only a few sellers.
The price was the result of negotiations with Baosteel, China's #1 steelmaker, but will apparently apply to all other steel companies that buy from the two Australian iron giants. It will also apply retrospectively to all iron bought from those companies since April 1.
Brazil's Vale, the third member of the oligopoly made a deal earlier this year with the #1 steelmaker in the world, Arcelor-Mittal, for a mere 70% price rise. This is reportedly the first time that the three companies have not set prices in lock step. Of course, the cost of bringing iron from Brazil to China is far higher than bringing from Australia.
The combined negotiation makes for a new level of collusion between the iron miners. It also happens while BHP Billiton is still pursuing Rio Tinto in an attempt to shrink the field to a duopoly. Both companies will be worth a hell of a lot more now that this deal is signed. The thought is that the influx of cash will make the attempt to buy out Rio Tinto even harder.
Iron, oil, and corn, three of the staples of the world economy, are increasing in cost at unbelievable rates. While much is made of the big oil companies and the OPEC cartel, ever tighter and scarier cartels operate in iron and in corn processing.
10:17:26 PM 
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