Rio under fire for BHP tie-up post Chinalco
A BACKLASH began over the proposed tie-up between mining giants BHP Billiton and Rio Tinto this weekend, as steel producers worldwide expressed their dismay, saying the marriage would allow the two companies to set the world price for iron ore.
Members for the industry have called on the European Commission (EC) to intervene in the deal.
Director general of the World Steel Association (WSA) Ian Christmas has said “we cannot see how this joint venture could be in the public interest and thus it should not be allowed to proceed.”
He raised concerns over the future of pricing regimes and the competitive environment for iron ore.
Meanwhile, Eurofer, the European steel industry lobby, also said it was “strictly against” the tie-up.
“This transaction has been structured so that marketing is kept largely separate, other than 15 per cent, which will be kept separate,” a Rio Tinto spokesperson said yesterday.
They added that the tie-up, which follows Rio’s dramatic cancellation of a deal with Chinese state-owned aluminium producer Chinalco, was under very different terms from BHP’s takeover bid last year.
Rio and BHP announced last week they would combine their Australian iron ore operations in a new joint venture. They will form a 50/50 marriage, combining all iron ore operations in Western Australia’s Pilbara iron ore province. The joint venture will require regulatory approval.
Rio also announced a $15.2bn (£9.5bn) rights issue.