Rio Tinto, BHP Billiton scrap co-marketing plan
October 15, 2009
Rio Tinto and BHP Billiton said Thursday they will sell iron ore separately from a proposed joint venture, scrapping plans to co-market some of the ore after pressure from global steel makers.
The two Anglo-Australian miners - the world's No. 2 and No. 3 in the iron ore market - had raised the ire of customers, particularly Chinese steel mills, with their plan to pool all their iron ore assets in Western Australia state.
The move would save the pair billions as iron ore prices slide, but has worried customers already unhappy with reliance on the three major global producers, rounded out by world No. 1 Vale SA of Brazil.
Rio and BHP had attempted to appease the market by pledging to keep their marketing operations separate for at least 85 percent of output, but on Thursday backed down further, saying that all production would now be marketed separately.
"The two companies believe that this change will clarify the nature of the JV for customers and emphasize its focus on realizing significant production and development synergies," the pair said in a statement.
European steel makers have called for European Union antitrust regulators to probe the joint mining project.
Earlier EU opposition to BHP's hostile $68 billion (R493 billion) bid for Rio Tinto forced it to abandon the takeover attempt last year. The pair then agreed the joint venture.
The European steel industry federation Eurofer - whose members include the world's biggest steel makers ArcelorMittal SA, ThyssenKrupp AG and Corus Group - said the joint venture isn't "much different from the effects which would have resulted" from last year's takeover bid. - Sapa-AP
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