China's third largest steelmaker, Wuhan Iron & Steel Group, yesterday said it had signed a long-term iron ore supply contract with Venezuela's Corporacion Venezolana de Guayana (CVG), in a move to help the company diversify its raw material sources.

Wuhan Iron will buy the iron ore using a different pricing mechanism from benchmark prices set annually by the world's top three suppliers, the Wuhan, Hubei-based company said in a statement on its website yesterday.

"This is the first contract to be implemented using the separate pricing mechanism, signaling that Chinese iron ore purchase prices will not be restricted by the three top iron ore producers," said the statement, without elaborating on what the rates would be.