A proposed establishment of a joint venture between BHP Billiton and Rio Tinto to operate their iron ore concessions in the Pilbara region of Western Australia jointly has been terminated.
BHP Billiton and Rio Tinto had proposed establishing a production joint venture covering the entirety of both companies’ Western Australian iron ore assets.
Since the agreement was signed it was apparent that regulatory approvals were unlikely to be achieved so the pair decided to dissolve the proposed joint venture.
As well as facing opposition from steel companies and steel organisations both parties were 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.
Ian Christmas, worldsteel director general said: “We are obviously pleased that this joint venture is no longer going ahead.
“We have long argued that allowing BHP Billiton and Rio Tinto to merge their Western Australia iron ore businesses was not in the public interest.
“However, the decision not to proceed with the JV does not address the already uncompetitive nature of the seaborne iron ore market where the top three mining companies have a combined share of about 70%.”
Euofer director general Gordon Moffat said a restriction in competition moving from a position of market dominance of three companies (Vale, BHP Billiton, Rio Tinto) to only two would substantially have reduced the consumer choice of supplier.
“It effectively would have created a duopoly with the global iron ore market in the hands of two companies,” he said.