Brazilian mining giant Vale said Tuesday that Luxembourg-headquartered ArcelorMittal, the world's largest steel producer, has agreed on an 86.7 percent rise in the iron pellet price for 2008.

   According to Vale, the world's largest iron ore and pellet producer, the reference price for blast furnace pellets for this year is 2.2020 U.S. dollars per dry metric ton Fe unit, and the reference price for direct reduction pellets is 2.4222 U.S. dollars per metric ton Fe unit.

   The rise is valid for the pellets transported from the Port of Tubarao in southeastern Brazil, Vale said in a statement.

   The statement was released one month after the announcement that Vale had negotiated a rise of 65-71 percent in the price for the iron ore it exports.

   According to the statement, steel makers in the Middle East and northern Africa, as well as Italy's Ilva, have already accepted the new iron pellet price.

   The use of such kind of iron pellets has been growing among steel makers because it has proved to be more economical and less polluting, as compared to iron agglomerated by the use of lime and coke.

   Vale operates seven pellet plants in the municipality of Tubarao, where it intends to build another one, with a capacity of 7.5 million tons per year, which is expected to go online in 2010.

   Additionally, Vale will inaugurate two other pellet plants this year: one in Minas Gerais state, also in the southeast, and the other in Espirito Santo state, in partnership with Samarco, with an annual production capacity of 7 million tons each.

   Vale sold a total of 40.8 million U.S. dollars' worth of iron pellets in 2007.