Rio, BHP Disappointed By Germany's Intention To Block JV
14 Octubre 2010 - 11:08AM
Noticias Dow Jones
Anglo-Australian miners Rio Tinto PLC (RTP) and BHP Billiton Ltd
(BHP) Thursday said they were "disappointed" by the German Federal
Cartel Office's stated intention to block the miners' proposed iron
ore joint venture.
The German regulatory process continues but the German Federal
Cartel Office made a statement Thursday indicating that it would
prohibit the joint venture, Rio Tinto said. BHP and Rio Tinto
expect to receive a formal notification from the regulatory body
next week.
The two mining titans announced a proposal to combine their iron
ore operations in the Pilbara region of Western Australia in June
2009. Each company would be entitled to half of the joint venture's
output and would market the iron ore independently of each
other.
The proposal has faced strong opposition from large steelmakers
who have expressed concern that the joint venture would concentrate
pricing power even more in the hands of the top three iron ore
producers who already control about two-thirds of iron ore trade
over seas. Steelmakers also voice concern that it could limit
future production capacity growth.
Both Rio Tinto and BHP said they continue to believe that the
joint venture is "pro-competitive" and would "increase the supply
of iron ore." They however acknowledged that the proposal faces
mounting concerns from some regulators and strong opposition from
some steelmakers.
Rio Tinto said "no decisions about next steps have been taken at
this stage while regulatory discussions continue."
The joint venture is expected to produce combined synergies of
more than $10 billion by streamlining infrastructure and investment
decisions while at the same time producing more iron ore, more
quickly, the companies have previously said.
At 1517 GMT, Rio Tinto shares were up 2.3% or 95 pence at 4,133p
a share while BHP Billiton's shares were down 0.3% or 6.50p at
2,209.50p.
-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328;
alex.macdonald@dowjones.com (Jan Hromadko in Frankfurt contributed
to this story)