The proposed joint venture between Rio Tinto and BHP Billiton will not lessen the level of competition between the two miners, Australia’s Trade Minister Simon Crean told journalists yesterday.
“The proposal that Rio and BHP have entered is to share facilities,” he said.
“They will still operate as separate marketing arms. They will therefore be competitors and so there won’t be any lessening of competition, and this is a message that I’ve conveyed to the Chinese Ambassador.”
China raised concern about an Australian export monopoly emerging as a result of the proposal.
Fat Prophets head of mining and resources research Gavin Wendt told MINING DAILY the joint venture would not create a monopoly but rather a duopoly.
“Each party is going to know each others business intimately so there will obviously be sharing of communication, potentially for the greater good.”
The threat of an export monopoly is not the only battle the proposed joint venture has had to contend with in recent days.
Western Australia Premier Colin Barnett has been in talks with BHP’s CEO Marius Kloppers and Rio Tinto’s chief executive Sam Walsh regarding the iron ore royalties and stamp duty payments.
“I had a good discussion with Marius Kloppers who outlined to me the details of the proposed joint venture,” Barnett told journalists.
“I made it very clear that if BHP is paying Rio Tinto US$5.8b for a share of Rio Tinto’s iron ore production we regard that as a change of ownership which would affectively receive stamp duty.
“We are talking about large amounts of money which would all be injected in the Western Australia economy.
“Kloppers now understands the State’s position on this and it will remain to be seen what happens over the next few months.”
Barnett said he would not hesitate to reject the deal if the issue of stamp duty could not be resolved.
“I’m not going to be obstructionist, I’m not being silly about this, and I’ve got a good relationship with Marius Kloppers, but we’ve got some negotiation. And the point I made when BHP and Rio announced this arrangement is that there is a third person at the table and that third person is Western Australia,” he said.
“This is about Western Australia’s biggest industry and I’m going to make sure that we look after the interests of this State.”