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Steel makers ask EU to block mining deal
November 16, 2009
European steel makers called Monday on EU antitrust regulators to block a joint venture between the world's No. 2 and No. 3 iron ore miners, BHP Billiton Ltd. and Rio Tinto PLC, that they claimed could hike prices for iron ore.
Eurofer - which represents ArcelorMittal SA, ThyssenKrupp AG and Corus Group - said the two companies' plans to combine Australian iron ore operations would allow them to share information on output that could affect industry negotiations to set benchmark prices and volumes.
The steel makers said the deal "will have the same impact on the iron ore market" as a merger between the two miners.
Last year, BHP Billiton had made a hostile $68 billion bid for Anglo-Australian rival Rio Tinto. BHP Billiton abandoned the takeover attempt after EU regulators opposed it because they said it could harm competition. Rio Tinto also complained that it was undervalued in the bid.
The two miners are now planning a joint production project to pool all their iron ore assets in Western Australia state, a move that could save them billions of dollars. Australia's BHP will also pay Rio Tinto $5.8 billion to equalize its contribution to the joint venture.
The deal rescues Rio Tinto after it scrapped a $19.5 billion deal with China's Chinalco over Australian fears that the deal would give a foreign company a strategic stake in one of the country's biggest industries. Rio's balance sheet is weighed down by $38.7 billion in debt.
Combining BHP Billiton and Rio Tinto would have allowed them to overtake Companhia Vale do Rio Doce of Brazil, the world's largest iron ore miner. - Sapa-AP
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