THE world’s most powerful steel industry has warned BHP Billiton, the world’s biggest miner, that it will get hurt if it acts “dishonourably” by walking away from the iron ore price negotiation system that has been in place for 40 years.

BHP is frustrated at being a price-taker in the iron ore market, where convention requires it to follow a benchmark price set by Brazil’s CVRD, the biggest iron ore producer, with a leading steel maker like Nippon Steel or Baosteel.

BHP is considering a more open “index” trading system that would bring its prices more in line with China’s white-hot iron ore spot market although BHP says the idea would not affect annual negotiations that could start as early as next week.

Some China watchers privately warn that BHP will not necessarily win if it picks a fight with China’s steel industry and, therefore, the Chinese Government.

Chen Xianwen, who heads the iron ore department of China’s top steel industry group, the China Iron & Steel Association, said the benchmark price negotiating system was a code of honour that experienced players would not break.

“It is dishonourable for one party to violate the code,” Mr Chen said, noting that this was his personal view. “It is understandable for a new player to break the code, but they (BHP) have already been in this game for a very long time.”

Sellers who abused their bargaining power for “short-term windfall profits” would be hurt when the market inevitably shifted against them, he said.

“It’s just like making friends. If you do good deeds to the other side they will do good deeds to you,” he said.

The speed of Mr Chen’s reaction was surprising, as Chinese policy positions are typically negotiated among myriad companies and bureaucracies before being publicly released.

Earlier, in a section of a speech prepared for a steel conference but not delivered because of time constraints, a top state planning official hinted that the Chinese Government could intervene if negotiations tilted too far against China’s steel makers.

“The iron ore price must be set by the market,” Xiong Bilin, deputy director of industry at the National Development & Reform Commission, wrote in his speech.

“But iron ore is a crucial input (for) the steel industry and the whole national economy, so the Chinese Government cares about this very much.”

Russell Scrimshaw, executive director of Fortescue Metals, which bills itself as “the new force in iron ore”, believes BHP’s comments could be more about posturing than substance.

“I don’t anticipate in the short term the benchmark system will go away,” he said. “You need to remember that we are in the very early phases of the price negotiation and each side is trying to position itself.”

But many miners would be ecstatic if an open index system replaced months of exhausting negotiations with myriad Chinese steel makers.

“It is a very good idea; I don’t know why they haven’t done it already,” said Yuri Makarov, who heads a new Russian mining company that plans to sell 10 million tonnes of iron ore annually to China within three years.

“It would make our life much easier by reducing negotiations.”

Engineers at Hewlett-Packard (http://www.businessweek.com/ticker/) made a startling realization about the servers running the company’s computing systems. Surging power consumption, along with rising energy costs, will soon make it more expensive to keep a server going for a year than to acquire one in the first place. Left unchecked, costs like these could interfere with HP’s goal of cutting energy consumption 15% by 2010.

So when HP began constructing a new 50,000-square-foot building to house high-powered computers, it sought advice from Pacific Gas & Electric (http://www.businessweek.com/ticker/). By following the California power company’s recommendations, HP will save $1 million a year in power costs for that data center alone, PG&E says.

Like HP, companies across the globe are adding equipment to keep up with surging computing needs—and then are forced to make substantial changes to curtail the leap in costs associated with running the big buildings, or data centers, housing all that gear. “Data centers use 50 times the energy per square foot as an office [does],” says Mark Bramfitt, principal program manager at PG&E.

Industry experts say the power consumption of data centers is doubling every five years or so, making them one of the fastest-growing drags on energy in the U.S. “The IT industry is where the automotive industry was 20 years ago,” says Rakesh Kumar, research vice-president at consulting firm Gartner (http://www.businessweek.com/ticker/). “We are so backwards when it comes to using alternative-energy and energy-efficient technologies.” Chilling Data

To keep servers at the right temperature, companies mainly rely on air-conditioning. The more powerful the machine, the more cool air needed to keep it from overheating. By 2005, the energy required to power and cool servers accounted for about 1.2% of total U.S. electricity consumption, according to a report released in February by staff scientist Jonathan Koomey of Lawrence Berkeley National Laboratory and sponsored by chip manufacturer AMD (http://www.businessweek.com/ticker/). Gartner reckons that by 2010, about half of the Forbes Global 2000 companies will spend more on energy than on hardware such as servers. Energy costs, now about 10% of the average IT budget, could rise to 50% in a matter of years, Kumar says.

That is, unless companies take some radical measures—soon. The first step is coming to terms with the power constraints of existing data centers and then deciding whether to construct new ones. That’s a pricey choice, considering a new data center can cost $1,000 per square foot, by PG&E’s estimates.

Another, often more alluring option: operating current centers in a more energy-efficient way—a tack taken by a growing number of companies, including Sun Microsystems (http://www.businessweek.com/ticker/), Verizon Wireless, and Wells Fargo (http://www.businessweek.com/ticker/). They’re lowering energy bills by making better use of existing gear and harnessing advances in cooling techniques and data-center design. “We’ve avoided roughly $20 million in build-out costs by being more efficient,” says John Hinshaw, chief information officer at Verizon Wireless. The joint venture of Verizon Communications (http://www.businessweek.com/ticker/) and Vodafone (http://www.businessweek.com/ticker/) cut its number of data centers from 10 to 3, he says. Who Gets the Electric Bill?

But if cutting costs isn’t enough incentive, some executives may soon have little choice in the matter. Before now, at many organizations, the chief information officer didn’t even see the utility bill, and operations or facilities departments often picked up the energy tab. But at a growing number of companies, reducing energy consumption is becoming part of the CIO’s job description. “More [chief financial officers] are becoming aware of the energy bill and are starting to hold CIOs responsible,” says http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=27198047&symbol=SUNW, vice-president of eco-responsibility at Sun Microsystems.

In the past Chief Constable Merydydd Hughes has been robust over the issue of speeding. He has warned of “anarchy” on the roads, and said he is amazed people disregard the safety limits.

Not as amazed, perhaps, as the anti-speed camera campaigners who were gleeful yesterday when it emerged that Mr Hughes has been accused of driving at 90mph in a 60mph area. The chief constable of South Yorkshire has been sent a notice of prosecution for an alleged offence in north Wales. Mr Hughes is the Association of Chief Police Officers head of uniformed operations, whose responsibilities include roads policing.

Mr Hughes told RoadSafe magazine this year: “It has always amazed me that people are so disregarding of speed limits when they obey other laws. We accept compromises in other parts of our lives for the greater good of society and yet many people carp at one that is most likely to save their life.”

An Acpo spokesperson confirmed yesterday that Mr Hughes had “received a notice of prosecution in respect of an alleged driving offence in north Wales … while on holiday.” The spokesperson said no summons had yet been received.

Neither South Yorkshire nor North Wales police would confirm the speed.

“Captain Gatso” of Motorists Against Detection called on Mr Hughes to resign and to “resign your speed cameras”.