BHP Billiton plans to use its new-found muscle in uranium to change the marketing of the radioactive material from long-term fixed price to spot-price index-linked contracts.

The push comes as the group wears the pain of having to cover low-price contract sales from its Olympic Dam mine in the June 2008 year with high-priced spot market acquisitions at a cost of $US187 million ($A233.7 million).

It also comes as the group prepares to outline its expansion plans for Olympic Dam next month, and as it dusts off development plans for its Yeelirrie deposit in Western Australia after the recent defeat of the anti-uranium mining Labor government in the state's poll.

BHP is planning to increase uranium production at Olympic Dam from 4144 tonnes in the June 2008 year to an eventual 19,000 tonnes a year. Before BHP's acquisition of WMC Resources in 2005, WMC's feasibility work on Yeelirrie suggested production capacity of 2500 tonnes a year.

At those sorts of production levels — worth about $3.6 billion at current spot prices — BHP would comfortably rank as the world's biggest uranium producer, giving its push to swing to contracts linked to spot price the momentum it will need to convert nuclear power utility customers to the concept.

BHP's low-priced, long-term fixed contracts are a legacy of the WMC takeover, with WMC forced to write them before uranium prices took off in response to the growing acceptance that nuclear power could provide the long-term solution to global warming.

Spot uranium traded below $US10 a pound in 2002. It smashed through the $US100 a pound level last year and has since settled back at about $US62 a pound. Because of production shortfalls at Olympic Dam, BHP is being forced to buy uranium on the spot market at prices that are multiples of its contracted price.

BHP's low-priced contracts are expected to be completed by about 2012. In its US annual report, released earlier this week, the company said that "going forward we expect to see an increasing proportion of sales made with flexible pricing terms: for example, with a price linked to a spot index".

It has a similar strategy in the bulk commodities of iron and coal but could face greater resistance from customers when it comes to uranium. Utilities are notoriously conservative when it comes to securing their uranium supplies. Their main focus is security of supply and predictable pricing.

The global market is split into 85% sold under long-term contracts and 15% spot.

ERA, controlled by BHP's takeover target, Rio Tinto, sells about 10% of its production from the Ranger mine in the Northern Territory into spot markets.

Meanwhile, a forecast from Goldman Sachs JBWere that iron ore prices could rise by 18% in the new contract year did not fire up trade in Rio, which is a much bigger producer of the steel-making raw material than BHP.

Rio shares fell $4.85, or 4.5%, to $102 as the market continued to fret about the impact of the US financial crisis on global economic growth. BHP shares fell 75¢, or 2%, to $35.65.

The reporter owns BHP shares.