15 Oct 2009
Oct. 15 (Bloomberg) -- Rio Tinto Group and BHP Billiton Ltd. will separately sell all iron ore from their proposed joint venture, scrapping a plan to jointly market as much as 15 percent, amid pressure from global steelmakers."The two companies believe that this change will clarify the nature of the joint venture for customers and emphasize its focus on realizing significant production and development synergies," Rio and BHP said in a joint statement to the Australian stock exchange.
Rio and BHP in June agreed to combine their iron ore assets in Western Australia to save them more than $10 billion. The proposal to combine the iron ore operations of the world's second- and third-biggest producers should be blocked by the European Commission, the World Steel Association said this week.
"It's not worth wrecking the chance of the whole thing so they just have to drop it," Peter Arden, a Melbourne-based senior mining analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co., said today. "The various competition bodies around the place just wanted to make sure there was no possible collusion of pricing and that little 15 percent looked a little odd in that regard because it was a joint effort and it's not material for what they are doing."
Agreements to complete the joint venture are on schedule, Melbourne-based BHP and London-based Rio said today.
Western Australia provides 18 percent of the world's iron ore. BHP dropped a takeover bid for Rio last year citing turmoil in global markets, slumping commodity demand and Rio's debt. The bid had faced a probe from the European Commission, which had "serious doubts" over a combination that would control more than a third of the world's iron ore exports.
