BHP Billiton and Rio Tinto are expected to run into some significant resistance to their proposed US$116 billion iron ore joint venture, with steelmakers in other countries believed to have reservations about the single entity damaging competition.
The miners signed a binding agreement Saturday that will see them pool their iron ore resources and infrastructure in the Pilbara, with an initial combined resource of up to 260 million tonnes.
Steelmaking companies and lobby groups in Europe, China and Japan have argued in opposition the joint venture, fearing it could give two of the world’s three largest iron ore producers too much power in the market.
The European Confederation of Iron and Steel Industries (Eurofer) last month spoke out against the proposed deal to the European Commission.
Eurofer represents major steel makers including ArcelorMittal and Corus, the European arm of Indian-based Tata Steel.
BHP and Rio have already lodged submissions with the Australian Competition and Consumer Commission (ACCC) and the European Commission, and are expected to do the same with Chinese and Japanese bodies in the near future.
China’s steel industry has also been vocal in its opposition of the pairing.
The Chinese Government-controlled China Iron and Steel Association (CISA) has a history of knocking back deal it believes have a “strong monopolistic colour.”
The ACCC said yesterday it hopes to announce a decision on the deal’s approval on 24 February next year, with submissions open until 15 January.
Given its approval of last year’s aborted takeover of Rio by BHP, it is considered unlikely the ACCC will block the joint venture.