After a protracted period of uncertainty and conjecture, BHP Billiton and Rio Tinto have confirmed their proposed $117 billion Pilbara iron ore joint venture has been canned.
The companies this morning finally acknowledged it had become increasingly unlikely they would receive all the required approvals from various regulatory bodies.
The transaction required approvals from the European Commission, the Australian Competition and Consumer Commission (ACCC), the Japan Fair Trade Commission, the Korea Fair Trade Commission and the German Federal Cartel Office.
According to a statement from Rio, all of these bodies had indicated they would not approve the joint venture in its current form.
Some regulators indicated they would require substantial remedies that would be unacceptable to both parties, including divestments, while others indicated they would prohibit the transaction outright, the company said.
The German Federal Cartel Office last week announced it intended to block the transaction.
"The full value of the synergies on offer from a 50-50 joint venture was a prize well worth pursuing,” Rio chief executive Tom Albanese said.
“Both companies have worked hard together over the last 16 months in a positive spirit to demonstrate its pro-competitive effects and I am disappointed that ultimately the regulators did not agree with us.”
BHP chief executive Marius Kloppers echoed these views, saying the decision to terminate the proposal had been reached reluctantly.
Both companies have mutually agreed that no break fee is payable.
The announcement comes after months of media speculation that the joint venture was in trouble, which forced repeated denials from the executives of both companies.
In another sign things were not on track, the companies had to repeatedly ask the ACCC to delay making its decision so they had more time for discussions with overseas regulators.
The joint venture was first tabled in June last year and an official agreement was signed in December.
The announcement will be well received by Chinese and European steelmakers and the world’s largest iron ore miner, Brazilian giant Vale.
Both Rio and BHP have reiterated their commitment to investing in their Western Australian iron ore assets.