China may implement a new iron ore pricing mechanism for contracts in 2010.

According to Rio Tinto iron ore unit CEO Sam Walsh, any number of scenarios could end up occurring in 2010, including China creating its own pricing mechanism after talks with China broke down recently.

This year China demanded a higher iron ore price than the 33% proposed to Korean and Japanese mills by Rio and BHP Billiton.

Last month the China Iron & Steel Association (CISA) said it will seek to separately establish prices from the rest of the world as cash prices and imports escalated.

According to Walsh, Rio is now selling ore to China using a ‘quasi-settlement’ or provisional pricing based on its agreement with Japanese mills.

Annual contracts for China should commence from 1 January, CISA’s secretary general Shan Shanghua said.

“We have not established contract prices for this year, neither has BHP Billiton nor Vale,” Walsh said.

The provisional pricing with China will be the starting point in terms of the negotiations for 2010, Wash said.