Rio CEO seeking BHP iron ore approval

Global miners BHP and Rio expect
the iron ore joint venture in Western Australia will fail to get
regulatory approval, the Sydney Morning Herald reports.

The joint
venture would generate $5bn in cost savings annually for BHP and comes
as the world’s largest diversified miner launches a $39bn hostile bid
for Potash Corp.

Albanese, speaking to reporters on the sidelines
of an industry conference in Shanghai, said the technical arguments for
the iron ore joint venture remained strong.

“The synergies are worth striving for, we’re going to continue to strive to attain those synergies,” Albanese said.

“We’re going to do everything we can to see if we can attain those synergies through the regulatory process.”

Rio
and BHP officials in Australia declined to comment on the report, which
quoted mining executives saying competition regulators in various
jurisdictions had rejected the two miners’ arguments that the venture
would not have price-setting power.

“It’s dead and the coffin’s
being lowered into the ground. It’s a matter of finding a face-saving
way out in the coming months,” the Sydney Morning Herald quoted one
senior mining executive as saying. The executive was involved in talks
with regulators, it reported.

The newspaper said the regulatory
mood had turned against the joint venture after the world’s top three
iron-ore miners – Rio, BHP and Brazil’s Vale – imposed quarterly iron
ore pricing on their reluctant Asian customers this year.

Rio and
BHP want to combine their iron ore operations in Western Australia,
estimating they will share in $10bn in cost savings. They had hoped to
gain regulatory approval by the end of this year.

But the
venture, unveiled last December, is awaiting approval from regulators in
Australia, Europe, China and elsewhere, and sceptical regulators,
especially in Europe, have indicated their reservations by issuing a
barrage of queries, the paper said.

BHP recently launched a
hostile bid for Canada’s Potash Corp, the biggest takeover deal this
year, and some analysts suggest the deal could take BHP’s resources away
from pushing the iron ore joint venture.