BHP Billiton, Rio Tinto Cancel Proposed Joint Venture

In a release, BHP Billiton and Rio Tinto have jointly announced that they are canceling their earlier announced plan to form a joint venture to develop iron ore business in Western Australia.

“The large synergies from combining our Western Australian iron ore assets with Rio Tinto’s have caused us to persevere in seeking to obtain regulatory approvals. However, it has become clear that this transaction is unlikely to obtain the necessary approvals to allow the deal to close, and as a result, both parties have reluctantly agreed to terminate the agreement,” says Marius Kloppers, BHP’s CEO.

BHP Billiton and Rio Tinto combined control 36 percent of the seaborne iron ore market; Vale, the third mining giant, controls 33 percent of the seaborne iron ore market.

In a statement, Rio Tinto says that both companies had been advised that the proposal would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office. 

The European Confederation of Iron and Steel Industries (EUROFER), in a release, applauded the decision by BHP Billiton and Rio Tinto to cancel a proposed joint venture.

“EUROFER has stated from the beginning that this joint venture could not be made to work in competition terms,” says Gordon Moffat, EUROFER’s director general. “We are confident that the European Commission will follow soon with a similar decision.”