The announcement by BHP Billiton and Rio Tinto on 18 October to give up their plans for a joint venture of their iron ore assets in Western Australia is a victory for competition in the international raw materials market says Eurofer director general Gordon Moffat.
Eurofer fought successfully in 2007 and 2008 against the previously proposed full merger between the two mining giants and now sees confirmation of its view that the Western Australian joint venture would materially not be much different from the original proposal of a full merger.
The signals from the German authorities, the European Commission, the Australian, Japanese and South Korean authorities to prohibit the JV demonstrate clearly that they share our view that the degree of concentration in the seaborne iron ore market is already very high.
“We very much welcome in particular the efforts made by the European Commission and German cartel authorities who have once again demonstrated their competence and authority in competition questions”, Moffat said.
BHP Billiton and Rio Tinto have market shares of 17 % and 19 % respectively in the seaborne iron ore market, while Vale, the third mining giant, controls 33 % (2008). These three companies together control 70 % of the seaborne iron ore market.