China against BHP Rio merger

December 14, 2009

, SYDNEY, Dec 14 – China\’s steel industry has sent a high-level delegation to Brazil to gather support for a campaign opposing BHP Billiton and Rio Tinto\’s iron ore joint venture in Australia, a report said on Monday.

The Financial Review newspaper said officials from the China Industry and Steel Association flew to Brazil last week seeking closer ties with Vale, the world\’s top iron producer.

"They have a common concern about the competition between Australia and Brazil," an unnamed Chinese steel mill official was quoted as saying.

"For Vale, the big market now is China because of what\’s happened in Europe," he added, referring to the global financial crisis.

"They are against the co-operation between Rio and BHP, because if the Australians get bigger they will corner the market."

BHP and Rio, the world\’s two biggest miners, signed a binding agreement this month on the deal to combine their vast Western Australian iron ore operations with expected savings of about 10 billion US dollars.

The joint venture was announced by Rio in June, along with a 15.2 billion US dollar rights issue, as it called off a huge cash injection from Chinese state firm Chinalco.

The report said China and Vale were understood to be discussing ways to lobby the European Commission competition regulator, which is yet to approve the joint venture.

It added that Rio and BHP were about to start negotiating 2010 iron ore prices with China, after this year\’s contract talks collapsed without an agreement.

Rio\’s relations with China were tainted by the arrest in July of three of its employees, including Australian passport-holder Stern Hu, over alleged industrial espionage in Shanghai.


Latest Articles

Live prices

Stock Market

Most Viewed