Spot pricing is better says BHP executive

A MORE transparent pricing mechanism for iron ore would protect buyers and sellers from secrecy-related problems, the world's biggest mining company says. BHP Billiton chief financial officer Alex Vanselow said a mechanism like the one used to price copper should be adopted for iron ore. Iron ore pricing is largely conducted on a long-term contract basis, but BHP and others prefer spot prices. "Nobody is asking how we negotiate copper prices into China because there is a pricing mechanism that's global, that's accepted worldwide -- that you sell at that price. So the same should happen with iron ore," Mr Vanselow said on ABC's Inside Business program yesterday. Asked if such a mechanism would have prevented the situation with Rio Tinto's Stern Hu, accused of receiving bribes from officials at Chinese steel mills and stealing business secrets, Mr Vanselow said that type of question "wouldn't even be possible" if prices were transparent.. "I don't know what the problem is for Stern Hu, so it's hard to make that assumption, but I'm saying transparent prices are for everybody to benefit," he said. It would be better for both supplier and buyer if iron ore were treated as a traded commodity, he said. "Nobody asks us what the price of copper is every day or what the price of copper is expected to be 12 months from now. People just pull out their screens, look at the curve and they have a good idea. It should be no different for iron ore." Despite what was happening in China with rival Rio, it was "business as usual" for BHP, he said. "Nothing has changed for us. We continue to sell into China and we're committed to our customers there and we're concerned to get paid for everything we sell. It's not just iron ore, it's coking coal, it's copper, so for us it has been business as usual," he said. Despite BHP's heavy spending commitments, the company's balance sheet allowed for acquisitions, Mr Vanselow said. With net assets in excess of $50 billion and geared at 12 per cent, "the balance sheet can be leveraged if the right acquisition comes around".