On Friday, June 5, 2009, the World Steel Association (worldsteel), whose members represent around 85 percent of the world's annual steel production, formally called on all relevant competition authorities to carefully review the joint venture proposed by Australia's two largest miners, BHP Billiton and Rio Tinto, for their Western Australia iron ore interests, stating that it should be blocked due to competition concerns.
Accordingly, worldsteel has repeated its concerns issued in February 2008 following today's announcement of a possible Rio Tinto-BHP Billiton iron ore JV.
worldsteel said, "If this Western Australia JV controlled all Australian iron ore exports, it would be in a monopoly position to force this through, increasing iron ore costs to the detriment of steel consumers worldwide. A consequence of allowing BHP Billiton and Rio Tinto to merge their Western Australia iron ore interests into a JV would result in almost 70 percent of world seaborne iron ore exports being controlled by the new JV and Brazil's Vale."
Speaking on behalf of steel producers worldwide, worldsteel director general Ian Christmas said, "The announcement of this possible JV does nothing to allay the far greater competition issues that we were and are still concerned about. We are again calling on competition authorities to seriously examine the obvious implications for future pricing regimes and the competitive environment for iron ore. At present we cannot see how this JV could be in the public interest and thus it should not be allowed to proceed."
Mr Christmas added, "As we said in our statements last year, worldsteel supports free and fair trade in steel. Competition between steel companies promotes innovation and efficiency. It promotes the growth in steel use and serves steel's customers and society as a whole. worldsteel has also supported the consolidation of steel businesses but not to the extent of endangering competition. Even the largest steel company in the world today accounts for less than 15 percent of total world steel production. We stand ready to provide access to our data to help competition authorities review the impact of this new JV proposal."