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worldsteel Calls for Iron Ore Competition Review
12/09/2009 - The World Steel Association has called for competition authorities to examine the impact of the proposed joint venture between Rio Tinto and BHP Billiton, noting that a consequence would be that almost 70% of world seaborne iron ore exports would be controlled by the new JV and Vale.
The World Steel Association (worldsteel) has called for competition authorities to thoroughly examine the impact of the proposed joint venture between Rio Tinto and BHP Billiton.
“The recently signed binding agreement between Rio Tinto and BHP Billiton is not materially different from the proposal issued earlier this year,” said worldsteel Director General Ian Christmas. “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.”
Vale controls virtually the whole of the Brazilian iron ore export industry, and a JV of BHP Billiton and Rio Tinto’s Western Australia iron ore interests would similarly control Australian iron ore exports, worldsteel notes.
“Competition makes a market strong and brings efficiency,” Christmas continued. “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.”
A consequence of allowing the merger would be that almost 70% of world seaborne iron ore exports would be controlled by the new JV and Vale, according to worldsteel, citing data from the Raw Materials Group quoted in UNCTAD Trust Fund on Iron Ore Information "Iron Ore Market 2008-2010."
The World Steel Association (worldsteel) represents approximately 180 steel producers (including 19 of the world's 20 largest steel companies), national and regional steel industry associations, and steel research institutes. worldsteel members produce around 85% of the world's steel.
