Rio Tinto Group the iron ore exporter, agreed to a 33% drop in contract prices with Japan’s Nippon Steel Corp.

Rio Tinto Group, the world’s 2nd largest iron ore exporter, agreed to a 33% fall in agreement prices with Japan’s Nippon Steel Corp., the first downfall in 7 years as the worldwide recession cuts demand.

London- based Rio said today in a statement Nippon Steel, the world’s 2nd largest steelmaker, contracted to pay Rio Tinto Group 97 cents a dry metric ton unit, or about $61 a ton, for its standard product in the year started April 1. That compares with last year’s record of 144.66 cents for Rio’s Pilbara Blend fines.

Rio’s iron ore unit chief executive Sam Walsh gave a statement that- “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.”

Rio share went up 1.2% to A$64.82, reversing an earlier down fall of as much as 1.7 %, at 2:07 p.m. Sydney time on the Australian stock exchange. Nippon agreed to pay 112 cents per dry metric ton unit for Rio’s premium Pilbara Lump product, 44% lower than last year’s contract price, the statement said.

Rio last year won an 80% gain in fines prices with Asian customers and a 97 %rise in lump prices. Australia’s 3rd largest iron ore exporter, Fortescue Metals Group Ltd., jumped as much as 8.3 % and Mt. Gibson Iron Ltd. as much as 9.1%.