On Thursday, October 15, Australian mining giants Rio Tinto Ltd and BHP Billiton Ltd said that they have agreed not to proceed with marketing output from their proposed iron ore joint venture.
On June 5, 2009, Rio Tinto and BHP Billiton signed a non-binding agreement to establish a production joint venture covering the entirety of both companies' Western Australian iron ore assets. Under the terms of the agreement, up to 15 percent of production was proposed to be sold by the joint venture, independent of Rio Tinto and BHP Billiton.
As a result of the discussions between the two companies, all production from the proposed joint venture will now be marketed separately by Rio Tinto and BHP Billiton.
As per a statement released jointly by Rio Tinto and BHP Billiton, the two companies said that they believe that this change will clarify the nature of the joint venture for customers and emphasize its focus on realizing significant production and development synergies.
"Rio Tinto and BHP Billiton are pleased with progress towards definitive JV agreements and expect to finalize these agreements on schedule," the statement continued, with the original announcement giving them until December 5.
The move looks designed as a response to a chorus of opposition from steelmakers to the planned joint venture, as steelmakers are concerned that the combination of the world's second- and third-largest iron ore producers will result in higher prices for the key steelmaking input. However, the main addressee of the miners' message is likely to be the European Union, which is yet to announce what level of regulatory scrutiny it plans to apply to the deal.