As reported on some few days ago, rio tinto has done contract hand marker the price of iron ore with China company steelmaker to increase price of 96.5%.

Today BHP Billiton gives statement relating to production and exploration BHP Billiton and about agreement made by Rio Tinto and company produce of mining products China.

BHP Billiton won’t come under pressure to up its takeover offer for Rio Tinto just because Rio has negotiated iron ore contract price increases of up to 96.5% with China’s steel mills.

Rio’s deal cements the same price increase as a minimum for BHP in its own negotiations with the mills, and while Rio is producing more iron ore and expanding production more quickly, BHP produces by far the most coking coal, a steel-making raw material that in April posted 2008-09 contract price increases of between 206% and 240%. The revenue uplift from iron ore and coking coal combined will be similarly huge for both groups, at between $US8 billion and $US9 billion, on my count.

One has to wonder, however, whether a near-doubling of the amount the Chinese mills are required to pay for iron ore in contracts that for the first time include an implied premium for Australia’s proximity to Asia is something that BHP chief executive Marius Kloppers needs as he argues with competition regulators that the merged BHP-Rio combination will be a price-taker, not a price-maker.

There is no iron ore producers’ cartel. The big three - BHP, Rio, which mines iron ore alongside BHP in the Pilbara, and Vale, the Brazilian giant - negotiate separately with the mills, and announce their annual contract price deals separately.

Historically, it has been a case of one price fits all, with the price parameters set by the group that breaks ranks first trickling down to the others. In the past four years, however, BHP has been mounting a different, and for the mills, a more difficult argument: that Australian producers deserve an iron ore price premium to recognise the fact that their ore is closer to the Asian producers, and therefore less expensive to ship.

Kloppers launched the campaign for BHP when he was holding down the title of chief commercial officer, and he and his team were friendless until this year, when Rio bought in.

I have to stress again that there is no producers’ cartel at work: Rio and BHP were not in the same room, tag-teaming Chinese steel company executives like some corporate version of Wrestlemania.

But they ran the same line for the first time, amassing in market terms about a third of global iron ore supply behind the freight differential campaign - and they have for the first time persuaded the Chinese mills to pay a freight differential bonus.

Opponents of the takeover, including, possibly, the Chinese mills, might find it hard to resist pointing out to the lead regulator examining BHP’s Rio takeover proposal, the European Commission, that the freight differential was resisted for three years when BHP was arguing alone, and conceded in the first year that Rio joined BHP in making the argument.