Australia’s competition regulator yesterday delayed ruling on BHP Billiton’s proposed iron ore joint venture with Rio Tinto after the mining giants requested more time to talk to foreign officials.
“The Australian Competition and Consumer Commission [ACCC] today agreed to a further request by BHP Billiton and Rio Tinto that the ACCC delay making a decision regarding the proposed joint venture,” the body said in a statement.
The miners wanted the decision held off “until after ... further discussions with overseas regulators” and to make further submissions, the ACCC said. No new date for the ruling was fixed.
The mining giants want to combine their iron ore operations in Western Australia’s Pilbara region in a deal that would see BHP pay Rio US$5.8 billion to level up operations as a 50-50 partnership.
Wrangling over the introduction of a so-called “super tax” on mining profits cast some doubt over the deal earlier this year, with BHP warning it could reduce the merger’s value.
An investigation by the EU’s competition watchdog has also delayed the venture, which is opposed by steelmakers in Asia and Europe.
Rio chief Tom Albanese last month dismissed speculation that it was “dead in the water” and that the miners were trying to find a face-saving way out of the deal.
Rio and BHP account for more than one-third of the world’s iron ore supply, and the ACCC has said it is examining whether major miners had cut output during the global financial crisis to deliberately inflate prices.
If the miners were shown to have engaged in “strategic behavior” to limit the fall of iron ore prices, the ACCC said it would raise real questions about whether they were able to manipulate the market.
Separately, Australia’s Asia-driven resources boom was “not guaranteed” and needs foreign investment to thrive, BHP’s chief said in Sydney, urging competitive policies on tax and climate change.
Asian demand for resources helped Australia dodge recession during the global slump, and BHP chief executive Marius Kloppers said China’s growth “underpins BHP Billiton expectations of the future demand for our products.”
Australia should not to be complacent about its economic advantage, warning that future success would rely on infrastructure investment, competitive taxation and a steady pool of skilled labor, he said.
“This cannot be funded without capital from overseas and it is vital that the investment climate remains internationally competitive,” he said.
While Australia has the mineral and energy resources and geographic location to prosper, success is not guaranteed. Over the last decade, Australia’s share of production of most commodities has stagnated or declined,” he said.
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