The WA Premier has slammed the joint venture proposal between BHP Billiton and Rio Tinto and says the Chinalco deal would have been more beneficial for the State.
Premier Colin Barnett believes the joint venture will cost jobs and may slash hundreds of millions of dollars in royalties and stamp duty.
“Security of employment is the first consideration in whatever is proposed… Both BHP and Rio have laid off several thousand WA mine workers over the last six months,” he said.
Barnett said the deal may threaten the future of the iron ore industry by putting it in the hands of one group.
“I will take some convincing that this is in the best interests of Western Australia going into the future,” he told the ABC. “The companies are representing their shareholders… they have made a commercial decision.”
Barnett said the proposed Chinalco deal would have been more beneficial for the State’s economy and believes Chinese investors will now need reassurance they are still welcome on the Australian arena.
“China is the economic phenomenon of this century… and whether we like it or not, [China] is our major trading partner,” he said.
Others have joined in Barnett’s chorus and claim the deal will worsen competition issues that are of global concern.
The World Steel Association is also opposing the BHP-Rio Tinto deal, which would leave just two suppliers to control 70% of the global iron ore trade.
While some are criticizing the move, others believe the BHP deal will be more beneficial for Australia.
Perth businessman Ian Melrose said the agreement will minimize the chance of a country-to-country dispute and is better for China in the longterm.
“There would have been some sort of hiccup… Nothing will ever be easy, but it’s a much better result than the takeover by Chinalco,” he said.
The deal has, in the past, been described as “a logical decision”, with both companies managing mining operations in close proximity to each other, including a portfolio of low-cost assets that would deliver benefits to shareholders.
International regulators will have to approve the deal before it goes ahead, including the European Commission, which challenged the merger in November before BHP pulled out.