EU steel makers seek probe into BHP-Rio deal

[June 09, 2009]  BRUSSELS (AP) -- European steel makers called Tuesday for European Union antitrust regulators to probe a joint mining project between the world's No. 2 and No. 3 iron ore miners BHP Billiton Ltd and Rio Tinto PLC.

EU opposition to BHP Billiton's hostile $68 billion bid for Anglo-Australian rival Rio Tinto forced it to abandon the takeover attempt last year.

The European Commission saw competition problems with the deal that they said could hike prices and reduce choice for European mineral and metals customers. Rio Tinto also complained that the bid undervalued it.

The two miners are now planning a joint production project to pool all their iron ore assets in Western Australia state, a move that could save them billions as iron ore prices slide. Australia's BHP will also pay Rio Tinto $5.8 billion to equalize its contribution to the joint venture.

The deal rescues Rio Tinto after it scrapped a $19.5 billion deal with China's Chinalco over Australian fears that the deal would give a foreign company a strategic stake in one of the country's biggest industries. Rio's balance sheet is weighed down by $38.7 billion in debt.

But the European steel industry federation Eurofer -- whose members include the world's biggest steel makers ArcelorMittal SA, ThyssenKrupp AG and Corus Group -- said the joint venture isn't "much different from the effects which would have resulted" from last year's takeover bid.

"The European steel industry continues to believe that a merger of iron ore assets of this type in a world market already dominated by just three suppliers would not be in the interests of the steel industry, European consumers or the European economy," it said.

Combining BHP Billiton and Rio Tinto would allow them to overtake Companhia Vale do Rio Doce of Brazil, the world's largest iron ore miner.

[Associated Press]

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