Rio Tinto to seek higher ore prices than Vale

By Matt Daily

NEW YORK (Reuters) - Rio Tinto Ltd (RIO.AX: Quote, Profile, Research) will seek a higher price increase for its iron ore in negotiations with Asian steel producers than its Brazilian rival Vale (VALE5.SA: Quote, Profile, Research) received because of its lower transportation costs, Chief Executive Tom Albanese said on Friday.

"They have a higher value and that should be reflected in the pricing mechanisms," Albanese told Reuters in a telephone interview. "We would expect to see something that builds in the fact that there is considerably cheaper cost of delivery."

Rio Tinto is headquartered in Australia.

Chinese steel maker Baosteel Group said earlier that it had agreed to a 65 percent price increase for iron ore supplied by Vale, and 71 percent more for higher-quality Carajas ore.

Rio Tinto, which is expected to meet with Baosteel next week, has said its ores are similar in quality to Vale's Carajas ore and deserve a similar premium, but are much cheaper to ship from Western Australia's Pilbara region to China.

Albanese said Rio Tinto was under no pressure to reach an agreement on the new iron ore prices.

"We're in an environment of strong markets and we can afford to be patient," he said.

He also repeated that Australian rival BHP Billiton Ltd's BHP.L(BHP.AX: Quote, Profile, Research) buyout offer of 3.4 of its shares per Rio share does not come close to the value of Rio Tinto, and that his company was steadily rising in value as compared to BHP.