The World Steel Association has called for competition authorities to thoroughly examine the impact of the proposed JV between Rio Tinto and BHP Billiton.
R Ian Christmas director general of worldsteel, speaking on behalf of steel producers worldwide, said “The recently signed binding agreement between Rio Tinto and BHP Billiton is not materially different from the proposal issued earlier this year. It still carries a great danger of restricting competition thus reducing consumers’ choice as it would create an entity whose controlling position in the world’s seaborne iron ore market would become even less fair than the unsatisfactory position that exists today. The proposed JV would simply turn an oligopoly of three players into a duopoly.”
Mr Christmas added that “Competition makes a market strong and brings efficiency. Competition between steel companies has made the global steel market healthier and brought benefits for steel customers. As a result, this has promoted growth in steel use which serves society as a whole. We view this revised proposed JV as potentially extremely harmful to the market, and we call for a very careful review by all the relevant competition authorities.”
Vale controls virtually the whole of the Brazilian iron ore export industry. A JV of BHP Billiton and Rio Tinto’s Western Australia iron ore interests would similarly control Australian iron ore exports.