Two of the world's biggest mining companies have agreed landmark deals with Asian steel mills to buy iron ore on quarterly contracts.

BHP Billiton and the Brazilian mining giant Vale signalled an end to the decades-old practice of setting an annual iron ore benchmark price after agreeing to short-term deals with several Asian steel makers.

Vale, the world's biggest iron ore producer, said that it had reached an agreement with Japan's Nippon Steel to sell the commodity at between $100 and $110/t, for the next three months.

The new price is about 90% higher than the current annual benchmark level. The move is a victory for the miners who lost out last year when iron ore prices spiked after a benchmark deal was agreed.

BHP confirmed yesterday that it has also moved away from the benchmark pricing system, for the vast majority of its customers, and that "the structural change that these settlements represent is consistent with BHP Billiton achieving market-clearing prices". The company refused to give details of specific deals, but sources said that it had reached a number of settlements.

The three largest iron ore producers, Vale, BHP and Rio Tinto, had been vocal in calling for a different settlement on iron ore prices. In the past, once one benchmark deal had been reached, the parties accepted the agreed price. However, Rio Tinto refused to comment on the announcements made by BHP and Vale yesterday, indicating that it has not yet reached deals with its customers.