Page last updated at 08:49 GMT, Friday, 4 July 2008 09:49 UK

BHP almost doubles Chinese prices

Man working in front of steel furnace
BHP and Baosteel held lengthy talks before agreeing the deal

Mining giant BHP Billiton has reached a deal with China's largest steelmaker to almost double iron ore prices.

Under the agreement, covering contracts for one year from 1 April 2008, BHP will increase its prices by up to 96.5% for deliveries to state-owned Baosteel.

The news comes days after BHP's rival Rio Tinto secured similar price rises with Chinese and other Asian firms.

Deals by the two groups are closely watched as they determine what smaller firms can expect to charge each year.

After announcing the deal at the Australian stock exchange, Anglo-Australian firm BHP added that it hoped to secure further agreements with other customers in China and Asia.

Soaring demand from China and rising commodity prices have led to strong profits for mining firms, who are in turn pumping more money into boosting output.

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