Vale proposes quarterly pricing to Japan mills-source

TOKYO, March 12 (Reuters) - Vale (VALE5.SA), the world's biggest iron ore producer, has proposed to Japanese mills a shift to a quarterly pricing scheme from annual pricing, a source with knowledge of the talks said.

The Brazilian miner had made the proposal by Thursday, the source said.

The Big Three mills -- Vale, Rio Tinto (RIO.AX) and BHP Billiton (BHP.AX) -- and Japanese mills such as Nippon Steel Corp (5401.T) are locked in tense negotiations on pricing of iron for the year staring on April 1. (Reporting by Yuko Inoue)