European Steel Group Supports Plan to Block Mining Deal

Oct. 15, 2010
German antitrust authorities say they oppose BHP, Rio Tinto joint venture.

An organization representing European steelmakers praised reported efforts that the European Union and German regulators plan to block a joint venture in Australia between iron-ore mining giants BHP Billiton and Rio Tinto.

European steel association Eurofer says it's "confident" the European Commission will prohibit the proposed joint venture for similar concerns raised by the organization since the deal was announced.

Eurofer claims the joint venture would create a duopoly by restricting competition in the iron-ore market to three companies -- BHP, Rio Tinto and Vale.

BHP Billiton and Rio Tinto have market shares of 17 % and 19 % respectively in the seaborne iron-ore market, while Vale controls 33%, according to 2008 figures cited by Eurofer. The three companies together control 70 % of the market.

"Eurofer has stated from the beginning that this joint venture could not be made to work in competition terms", said Eurofer director general Gordon Moffat.

Rio Tinto and BHP Billiton voiced disappointment Oct. 14 with what they said was the expected rejection by German regulators of their plan, according to Agence France-Presse news service reported.

"BHP Billiton and Rio Tinto have noted with disappointment the statement today by the German Federal Cartel Office that its current intention is to prohibit the companies' proposed iron ore production joint venture in Western Australia," the groups said in a statement.

They said the German regulatory examination was continuing, with formal notification expected next week, AFP reported.

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