Australian iron ore miner BHP Billiton is offering mainland steelmakers discounts to promote its planned iron ore price index, the Australian Financial Review reported yesterday, citing sources from two major mainland steel mills. BHP has offered to sell ore at cheaper indexed prices from January 1 if the mills comply with the new pricing mechanism three months before contracts expire, the newspaper said. The company has long been looking to transfer its expiring contracts into an iron ore index to better reflect spot market prices than the current annual pricing system, which involves benchmarking through negotiations. Spot iron ore prices are now about 20 per cent cheaper than contract prices owing to the plunge in global demand because of the economic crisis. BHP's proposed price index was opposed by mainland steelmakers, who said it would be open to manipulation by market speculators. A spokesman for BHP said it did not comment on iron ore negotiations.