The company’s higher-quality lump ore will now sell for 112 cents a ton, down nearly 45 percent from 201.69 cents. Overall, the average price reduction, which applies to all iron ore delivered during 2009 from 1 April,  is 37%.

"We believe this settlement is a realistic outcome for both parties, one that reflects the global market for iron ore and the current challenging market conditions facing our customers," said Sam Walsh, Rio Tinto iron ore chief executive.