Mining giant Rio Tinto yesterday denied making any “final decisions” on its controversial iron ore merger with BHP Billiton, as the massive deal appeared on the brink of collapse.
Rio conceded “potential obstacles” had been raised by Japan, South Korea, Australia and the European Commission, after Australian media said the tie-up between two of the world’s top producers was set to be scrapped.
“The Rio Tinto board has not made any final decisions about possible outcomes or next steps relating to the proposed Rio Tinto/BHP Billiton iron ore production joint venture in Western Australia,” Rio said in a statement.
Plans to combine operations in Western Australia, a major source of iron ore for Asia’s steel mills, have roused anti-competition concerns among customers including China, the world’s leading consumer.
Rio said Japan and South Korea had both flagged problems in interim reports, while possible objections had also come up in discussions with Australia and the European Commission.
“The board acknowledged recent communications from regulators that indicate potential obstacles to achieving clearance for the joint venture,” Rio said.
The statement follows a report in yesterday’s Fairfax newspapers, citing sources close to Rio’s board, which said the company was poised to walk away from the joint venture.
“They [BHP] can’t object to that [decision],” Rio chairman Jan du Plessis was quoted as telling fellow directors. “That’s kind of us stating our investment preference. They will no doubt have their own measurements and I think that’s fine.”
The report said Rio now opposed the deal because of its improving financial performance and objections from shareholders, as well as a feeling that its terms favored BHP.
The Anglo-Australian companies have already asked Australian regulators for more time to speak to foreign officials, prompting speculation the scheme would miss its deadline at the end of this year or be scrapped altogether.
The joint venture was announced at the height of the financial crisis in June last year, as Rio struggled with large debts after its takeover of Canadian aluminum group Alcan.
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