Steel mills in China's Shanxi province have signed iron ore supply contracts with global miners Vale S.A. (VALE), Rio Tinto PLC (RTP) and BHP Billiton Ltd. (BHP), Shanxi media reported this week.

The development underscores the weak clout the China Iron and Steel Association enjoys, as it had earlier forbidden all mills from independently negotiating supply deals with miners.

The Shanxi deals follow reports Vale had signed contracts with 38 smaller, privately owned mills for contracts involving some 50 million metric tons of ore shipments. It is unclear if the Shanxi deals were part of this settlement.

Reports from the Southern Metropolis Daily and Shanxi Youth newspapers said "many" mills were involved.

"We have contracts with the three big miners, and our steel products are already made using long-term ore," a Shanxi mill official was quoted as saying.

Shanxi Iron and Steel Association Secretary-General Zhu Fengliang was quoted as confirming some steel mills had already signed 2009 contracts.

"But the price hasn't been reported because it involves commercial secrets," he said.

Zhu couldn't be reached for comment Friday.

The mills involved were described as small and mid-sized. The reports said some of them have an annual production volume of 1 million tons and above.

Despite miners' settlements with Japanese, Korean and Taiwanese mills this month, the CISA still hasn't arrived at a benchmark price for this year.

It is holding out for cuts of 40% or more from last year's benchmark iron ore price, which global miners have rejected.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848; chuin-wei.yap@dowjones.com