BHP, Rio Tinto merger detrimental to steel consumers: IISI
IISI, the apex body of global steel producers, on Wednesday opposed the proposed merger between major iron ore suppliers; BHP Billiton and Rio Tinto, and called on relevant competition authorities to review the alliance.
By PTI |
NEW DELHI: IISI, the apex body of global steel producers, on Wednesday opposed the proposed merger between major iron ore suppliers; BHP Billiton and Rio Tinto, and called on relevant competition authorities to review the alliance.
IISI said the proposed merger will raise steel prices and would be against public interest.
In a statement, International Iron and Steel Institute (IISI) Secretary General Ian Christmas said CVRD owns virtually the whole of the Brazilian iron ore export industry. BHP Billiton together with Rio Tinto would similarly control Australian iron ore exports.
He said all Australian iron ore exports go to Japan, China and other Asian countries. So, Australia was the main source of ore for these countries.
BHP Billiton has for years been trying to equalise landed prices for its ore exports to Asia with the landed cost of Brazilian ore, which includes a far higher freight component.
"If it controlled all Australian exports it would be in a monopoly position to force this through, increasing iron ore costs to the detriment of steel consumers worldwide," he said.
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Therefore, allowing BHP Billiton and Rio Tinto to merge would create a virtual monopoly on Australian ore exports to match that of CVRD in Brazil and almost 80 per cent of world seaborne iron ore exports would then be controlled by these two suppliers, he said in the statement. He asked competition regulators to examine implications for future pricing and the competitive environment for iron ore.
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