Chinese steelmaker Wuhan Iron & Steel Group and Venezuelan iron ore producer Corporacion Venezolana de Guayana (CVG) have entered into an iron ore supply deal.

The long-term contract will help Wuhan diversify its sources of iron ore supply, according to China Daily.

Wuhan said that under the contract it will purchase iron ore according to a separate pricing mechanism that is different from the benchmark prices annually established by the world’s top three iron ore producers.

Wuhan said that this is the first contract to be executed using a different pricing mechanism, indicating that the top producers will not restrict Chinese iron ore purchase prices.

The world’s top three iron ore producers – BHP Billiton, Rio Tinto and Cia Vale do Rio Doce – account for a combined 75% of worldwide sea-borne iron ore trade.