THE contract iron ore price could rise by as much as 20 per cent in the next round of negotiations between miners and steel makers, Gindalbie Metals chief executive Garret Dixon said today.

Gindalbie is one of a number of smaller Australian miners now working to bring on new sources of iron ore to meet strong demand from China and some analysts believe that this, together with major expansions of the production from iron ore giants like BHP Billiton and Rio Tinto, could see iron ore prices fall from current record highs.

But Mr Dixon said many of the projects currently being talked about would not be delivered on time and, with Chinese demand remaining strong, he believed prices would rise.

"We think around 20 per cent next year might be achievable," he told reporters at the Diggers and Dealers Conference in Kalgoorlie.

"We are not convinced all the projects out there will actually ramp up as quickly as has been talked about."

Australian iron ore miners this year won a 79.88 per cent increase in benchmark contract prices for iron ore fines and a 96.5 per cent increase for lump, a premium product.

BHP Billiton, the world's third-biggest iron ore producer, is pushing for the longstanding benchmark pricing system to be replaced with indexed pricing.

But Mr Dixon said he believed the benchmark system is likely to stay in place, but with some refinement with different increases for different iron ore products.

Another factor now limiting the ability of junior mining companies to bring on new sources of supply was funding, Mr Dixon said, with the cost of debt rising and marginal projects struggling to win backing.

"Good projects will get funding but it is much, much more difficult and the numbers we are talking about are an almost doubling of the cost of that debt," he said.

Gindalbie has won the backing of Chinese steelmaker Ansteel, which has entered into a joint venture to develop the Karara Iron Ore Project.

The Perth-based company has had some preliminary talks with Ansteel about the possibility of working together on other projects, but for now the pair remain completely focused on delivering Karara.

A growing trend globally has been for steel makers to move to buy iron ore mines and take over iron ore juniors as they move to secure access to new sources of supply.

Ansteel has never given any indication that it might look to take over Gindalbie, Dixon said, and there would be little need for it to do so as it has an offtake agreement for all the production from Karara.