THE country’s iron and steel industry has voiced strong objections to a proposed merger between mining groups BHP Billiton and rival Rio Tinto, charging the takeover would create a “monopoly” in the iron ore trade.
BHP’s chief executive officer, Marius Kloppers, is traveling the region seeking support for the plan amid increasingly vehement protests from others in the industry.
The statement by the China Iron & Steel Association (CISA), seen Tuesday on the group’s Web site, contended that the merger would create a monopoly and would be unfair for steel producers. It was the group’s first comment on the issue.
The world’s three biggest iron ore producers, BHP, Rio Tinto and Brazilian mining company CVRD, or Companhia Vale do Rio Doce, account for more than 75 percent of all global iron ore trade, the statement said.
“We do not want to see this merger create an even bigger monopoly,” it said. “The excessive industry concentration of the iron ore producers ... is unfair for steel producers.”
It said that as the world’s biggest steel producer China has the most to lose, and that it relies on imports from Australia for 38 percent of its iron ore. “This is not a good thing,” it said.
BHP Billiton, the world’s biggest mining company, headquartered in Melbourne, Australia, and listed in both London and Sydney, is seeking to take over Rio Tinto. But its US$150 billion proposal was rejected earlier this month.
Kloppers was meeting Tuesday with South Korea’s two biggest steelmakers, a day after facing opposition to the plan from Japan’s steel industry.
Samantha Evans, a spokeswoman for BHP Billiton in Melbourne, confirmed that Kloppers was visiting customers in Japan, South Korea and China this week but declined to give further details.
All three countries depend heavily on imported iron ore, and China, as No. 1, has long chafed at its relatively weak leverage in negotiations over iron ore pricing.
“The CISA is paying close attention to the matter, which is of great concern,” the industry group’s statement said.
The Japan Iron and Steel Federation has likewise criticized the merger, calling it undesirable for industrial competition and pricing. After a merger, 60 percent of Japan’s raw materials imports would have to come from the two companies, the federation said.
On Monday, the International Iron and Steel Institute (IISI) urged in a statement from Brussels that relevant regulatory authorities review any combination of BHP Billiton and Rio Tinto.
“CVRD, Rio Tinto and BHP Billiton account for over 70 percent of world trade” in iron ore, said the IISI Secretary General Ian Christmas. “Any further consolidation between the big three would create a virtual monopoly in the business ... This merger is not in the public interest and should not be allowed to proceed.”
According to CISA, China’s iron ore imports in January-September were an average 27 percent more costly than a year earlier, with the price up nearly 32 percent as of Sept. 1.
It said some steel mills had been forced to shut down because they could not afford the price increases.
(SD-Agencies)
