Germany blocks iron ore joint venture
Friday 15 October 2010
Germany's Central Cartel Office, which is responsible for ruling on competition cases, hammered a further nail in the coffin of BHP Billiton and Rio Tinto's huge iron ore joint venture yesterday when it announced it would deny approval for the project.
The two companies said that they noted the decision with "disappointment," adding that they are likely to receive formal notification of the German decision next week. They added that the project, which would be expected to make savings of $10bn, is "pro-competitive and will increase the supply of iron ore".
In truth, the two have abandoned hopes that the deal will go ahead. Two weeks ago, the minutes of a Rio Tinto board meeting were leaked to The Sydney Morning Herald, which quoted the miner's chairman, Jan du Plessis, telling the board he did not think BHP would object to Rio calling the deal off.
"We should simply work on the basis that both parties worked well and in good faith to make this thing work and both parties agreed, simultaneously, it wasn't possible," he was reported as saying.
BHP has refused to comment on the reports, but sources close to Rio have confirmed that the deal is now "very unlikely" to go ahead as a result of regulatory restrictions. Several competition authorities are still to rule on the deal.
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