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China brands BHP/Rio tie-up a monopoly

Reuters | Thu, 17 Dec 2009 12:49

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[miningmx.com] --CHINA'S steel industry said it "firmly opposes" BHPBilliton and Rio Tinto's iron ore joint venture, branding it a "monopoly in disguise".

The merger of BHP and Rio's iron ore operations in Australia "goes against fair competition principles" and Beijing should use anti-monopoly measures to stop the deal, the China Iron and Steel Association (Cisa) said in a statement.

"The Cisa firmly opposes" the deal which "will certainly cause irrational price rises" said the statement posted on csteelnews.com, a website owned by Cisa.

"China is the world's largest iron ore consumer and importer. Anti-monopoly authorities in China should firmly resist the Rio-BHP tie-up plan according to the anti-monopoly law to protect the interests of Chinese steel firms."

BHP and Rio, the world's two biggest miners, signed a binding agreement this month on the deal to combine their vast Western Australian iron ore operations with expected savings of about $10bn.

The joint venture was announced by Rio in June, along with a $15.2bn rights issue, as it called off a huge cash injection from Chinese state firm Chinalco.

Rio's relations with China were tainted by the arrest in July of three of its employees, including Australian passport-holder Stern Hu, over alleged industrial espionage in Shanghai.

The detention of Hu, Rio Tinto's lead negotiator on iron ore prices in Shanghai, has raised diplomatic concerns between Australia and key market China and sent a sobering message to the business community.

In a bid to gather support for a campaign opposing the Anglo-Australian miners' tie-up, the Cisa sent a delegation to Brazil last week seeking closer ties with Vale, the world's top iron producer, earlier media reports said.

Submissions had been made to both the Australian Competition and Consumer Commission and the European Commission regarding the deal, said BHP and Rio previously, adding the EU authorities were already investigating it.

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