The proposed establishment of a joint venture between BHP Billington and Rio Tinto to operate their iron ore concessions in the Pilbara region of Western Australia jointly has been terminated.
Proposed on 5 June 2009, BHP Billiton and Rio Tinto had proposed establishing a production joint venture covering the entirety of both companies’ Western Australian iron ore assets. This resulted in the signing of definitive agreements on 5 December 2009. The completion of these agreements was subject to a number of conditions, including regulatory approvals.
Since the agreement was signed it has become increasingly apparent that regulatory approvals were unlikely to be achieved. Consequently, BHP Billiton and Rio Tinto announced on 18 October 2010 that they have reluctantly agreed to dissolve the proposed joint venture.
As well as facing opposition from steel companies and steel organisations both parties have recently been advised that the proposal would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office.
While BHP Billiton was progressing approvals for the joint venture, it has continued to invest in its Western Australian iron ore business. With the termination of the joint venture, this focus on efficiently growing and operating our Western Australian iron ore business through its existing Perth-based Iron Ore management team will continue.
Rio Tinto say they have exceptional operating assets and expansion potential in the Pilbara and are already pushing ahead with a major development programme.
Following the intervention of the Western Australian government Rio Tinto and BHP Billington have already had to open their rail networks to the coast to other mining companies including the Fortescue Metals Group.