The World Steel Association and Eurofer, the European steel lobby group, called for regulators to examine the joint venture between BHP Billiton Ltd. and Rio Tinto Group as it will limit competition in the industry.
Authorities should “thoroughly examine the impact of the proposed joint venture,” World Steel’s Director General Ian Christmas said in an e-mailed statement today. The venture is “not materially different” from an earlier merger proposal by BHP and carries “a great danger of restricting competition.”
BHP and Rio, the world’s second- and third-largest iron ore exporters, plan to combine mines, rail, ports and workforces in Western Australia’s Pilbara region into a 50-50 joint venture to save at least $10 billion a year. BHP abandoned a hostile bid for Rio in November 2008 that faced a probe from the European Commission, citing its “serious doubt” over a combination that would control more than a third of global iron ore exports.
The venture agreed by the companies Dec. 5 “must be fully examined by the European competition authorities,” Eurofer Director General Gordon Moffat said in a separate e-mailed statement. The group “restates its strong reservations” over a deal that will “unavoidably lead to market concentration.”
Australia’s competition regulator, reviewing the BHP and Rio venture, said on its Web site today it was seeking comment from customers and rivals of the miners. The deal will also be reviewed by the European Commission.
“Key point is this is a production joint venture so marketing and sales will remain separate, which means the two companies will continue to compete,” Nick Cobban, Rio’s spokesman in London, said by phone.
Illtud Harri, a London-based spokesman for BHP, said there would continue to be “complete independence in the marketing and commercial strategies” of the two companies.
The two mine operators expected the deal to be completed by the middle of 2010, according to a statement on December 5. |
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