Create a free account to continue

Beijing Protests Rio-BHP Iron Ore Deal

China's steel industry voiced opposition to proposed joint mining venture between mining giants Rio Tinto and BHP Billiton and called for global opposition against it.

BEIJING (AP) -- China's steel industry voiced opposition Friday to a proposed joint mining venture between global mining giants Rio Tinto Ltd. and BHP Billiton Ltd. and called for global opposition against it.

The world's No. 2 and No. 3 in the iron ore market signed binding agreements early this month to combine their Western Australian iron ore assets, with expected savings of at least $10 billion.

"This is a monopoly in a disguised form, and it will greatly threaten the development of the global steel industry," the China Iron & Steel Association said in a statement posted online Friday at its newspaper China Steel News, but dated Dec 9.

It called for countries to "block any attempt at a monopoly by Rio and BHP" by taking anti-monopoly measures.

China's Ministry of Commerce said Wednesday that it hadn't received regulatory review applications from the two companies.

Tensions between the association and foreign iron ore suppliers were heightened by China's detention in July of four employees of Rio Tinto Ltd., lead negotiator for global miners in price talks, on allegations of commercial spying and bribery during 2009 price talks.

The four included an Australian, Stern Hu. They were charged in August with paying bribes to obtain confidential information about China's steel industry.

Australia is a key supplier of iron ore and other resources for China's fast-growing economy.

China, the world's largest iron ore importer, failed to reach an agreement with suppliers in price talks this year after the association insisted on a deeper price cut than Rio and BHP had agreed with other Asian countries.

Industrial analysts expect iron ore prices to rise about 10 to 20 percent next year on increasing demand as the world's economy recovers.

Ahead of next year's price talks, Brazil's Vale SA, the world's biggest iron ore supplier, has signed independent ore contracts with Chinese steel mills for fixed freight charges, the state-run China Daily newspaper reported Wednesday.

Rio and BHP said submissions had been made with both the European Union and the Australian Competition and Consumer Commission, and they expect to complete the deal in the second half of next year.

Last month, European steel makers called for EU antitrust regulators to investigate the project. In 2008, EU opposition to a hostile bid by BHP for Rio Tinto forced it to abandon a takeover attempt.

Associated Press researcher Bonnie Cao contributed to this report.

More in Supply Chain