28 January 2010 | Paul Snell
The European Commission (EC) is to investigate a proposed joint venture between two of the world’s biggest mining firms to pool iron ore production in Australia.
There are concerns the tie-up – between Rio Tinto and BHP Billiton, the second and third largest producers of iron ore in the world respectively – could affect competition.
Brazilian mining multinational Vale holds the top spot in global iron ore production, most of which is used in the manufacture of steel.
The decision to open an inquiry does not imply a breach of competition and there is no deadline to complete the investigation.
When Rio and BHP announced the joint venture in December the companies predicted an expected $10 billion of total savings through combining operations, joint procurement and reduced transport costs. The companies have also referred the deal to the Australian Competition and Consumer Commission.
In 2007, BHP estimated
it could achieve £408 million of procurement savings through a Rio Tinto takeover during its ultimately unsuccessful courtship of the company’s shareholders.