Rio and BHP seal deal
MINING giants BHP Billiton and Rio Tinto shook hands on their proposed $116bn (£67.8bn) iron ore tie-up over the weekend, putting paid to reports that competition bodies would interfere with the deal.
The agreement, which is expected to produce synergies of $10bn, has been a bone of much contention for Chinese customers, who say it raises serious questions on excessive dominance of the iron ore market; Rio and BHP are two of the world’s three largest producers of iron ore, the other being Brazil’s Vale.
But the once bitter rivals – Rio fought off a hostile takeover bid from BHP in 2008 – expect the deal to complete in the second half of next year without delays from the European Commission or the Australian Competition and Consumer Commission.
In Brussels, the European Commission said: “We will ensure that there is full compliance with the EU’s anti-trust rules.”
The long-awaited tie-up was originally outlined in June, but formalised on Saturday in binding agreements signed by both companies just ahead of an agreed deadline.
Under the plan, each company will end up with 50 per cent stakes in the combined Western Australian iron ore assets, but will continue to market the ore separately.
“It is an important milestone towards delivering substantial additional benefits to both sets of shareholders, and to the shareholders of our respective joint venture partners in the resource-rich region of Pilbara,” Marius Kloppers, chief executive of BHP Billiton said.