Crunch time for BHP and Rio venture
BHP BILLITON and Rio Tinto’s $116bn (£72bn) iron ore joint venture is hanging by a thread after the European Commission has told the companies it will object to the deal.
The EU’s competition commissioner Joaquin Almunia is preparing to send a list of objections to Rio and BHP this week, which will ask the world’s second- and third-largest iron-ore producers for heavy concessions.
“I cannot anticipate how this document will be finally written but it is obvious that we have concerns on this joint venture and they have to react to this statement of objections,” Almunia said at the weekend.
The blow comes on top of the German regulator’s announcement last Thursday that it intended to object to the plans. Watchdogs in Australia, Japan and Korea are also due to rule on the venture.
The plan to share iron ore operations in Australia would save the companies $10bn, but has been beset by complaints from the steel industry and shareholders since the idea was proposed in June 2009.
It is likely to feature high on the agenda at BHP’s annual general meeting in London on Thursday.
The proposal and its commitments are due to lapse at the end of 2010. It was yesterday reported that the companies are now looking for ways to break the deal without suffering $250m penalties.
Rio Tinto and BHP were unavailable for comment yesterday.