World steel opposes Rio Tinto, BHP Billiton marriage

IISI sees a near-monopoly if iron ore firms merge

By Tom Stundza -- Purchasing, 11/19/2007 7:35:00 AM

Iron and Steel Institute (IISI) in Brussels today issued a formal request that all relevant competition authorities review the proposed alliance between BHP Billiton and Rio Tinto because it would create a near-monopoly in iron ore supply. The IISI says “this merger is not in the public interest and should not be allowed to proceed.”

Writing on behalf of steel producers worldwide, IISI Secretary General Ian Christmas in Brussels, points out that “seaborne iron ore is dominated by just three companies (CVRD of Brazil, Rio Tinto of the U.K. and BHP Billiton of Australia) which account for over 70% of total world trade.

“Any further consolidation between the big three would create a virtual monopoly in the (iron ore) business,” says Christmas. “For this reason, not only will the steel industry strongly oppose the potential merger of BHP Billiton and Rio Tinto, but it is vital that the competition authorities in the European Union, U.S., China, Australia and Japan also recognize the threat that this merger poses to the interests of steel consumers and the general public.

A combination of BHP and Rio Tinto would create a firm worth about $350 billion with interests in ferrous, nonferrous and precious metals and industrial minerals. While BHP Billiton is the world's largest mining company, Rio Tinto is the third biggest.

Rio Tinto has so far rejected BHP Billiton's $140 billion approach but analysts say the issue isn’t settled.