BHP Billiton Ltd. (BHP) has taken a significant step forward in its campaign to change the way iron ore is priced, announcing that 30% of its sales will now be a mix of indexed pricing, quarterly pricing and spot sales.

BHP said it has also settled a further 23% of its sales under the traditional annual benchmark system at prices in line with those already agreed between Rio Tinto Ltd. (RTP) and Japanese steel mills.

And talks are ongoing with customers over the remaining 47% of its iron ore volumes, BHP said.

"The company believes that current settlements are indicative of continued progress towards transparent market pricing," BHP said in a statement.

Iron ore miners have been locked in a protracted standoff with Chinese steel makers in annual pricing talks, but BHP would not say if Chinese mills were among those who have agreed to indexed and quarterly pricing.

While BHP declined to give any break down by country of its various agreements, it appears likely that the 23% who have accepted the Rio Tinto price, a 33% cut for fines and 44% for lump, will be Japanese and Korean steel mills who have already shown they are happy with this price.

Similarly, with just under half of BHP's iron ore sold into China, it seem reasonable to assume that the 47% of sales where talks are ongoing will relate to China.

However, a major point of interest will be whether any Chinese mills are among those who have agreed to indexed pricing or quarterly pricing negotiations and if so whether the China Iron & Steel Association, lead negotiator for China in this year's talks, has approved the move.

Macquarie Equities senior mining analyst Brendan Harris said that from BHP's announcement it appears the pricing stand off with China is ongoing, but that the shift of significant tonnages to indexed and quarterly pricing was still a major development in the fast evolving iron ore market.

"This is confirmation that there will be significant volumes that will float at indexed or spot pricing, which is currently trading at well above benchmark," he said.

"It means that the market has changed forever and we have now moved towards a structure which is a blend of different types of contracts with some related to this indexed or spot mechanism which creates more volatility but also more transparency."

BHP Chief Executive Marius Kloppers has long argued that the current annual benchmark pricing system is outdated and that more regular repricing is needed to reflect market movements during the year.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com