[miningmx.com] — The German Federal Cartel Office on Thursday said it intends to prohibit BHP Billiton (BIL) and Rio Tinto’s proposed iron ore production joint venture in Western Australia.
The resources giants said in a statement that they were disappointed by the German regulator’s statement.
They said they were expecting to receive a formal notification next week. The companies are expected to be able to respond before a final decision is taken by the regulator.
“The parties continue to believe that the joint venture is pro-competitive and will increase the supply of iron ore. However, both BHP Billiton and Rio Tinto acknowledge the concerns expressed by some regulators and the obstacles to achieving clearance for the joint venture,” the groups said.
They also emphasised that no decisions about next steps had been taken while regulatory discussions continue.
Japan’s regulator has in the meantime said it is concerned that the joint venture might limit competition in the iron ore market.
The Japan Fair Trade Commission, the Japanese anti-monopoly watchdog, has asked the companies to submit any rebuttals or opinions on its view and said it would make a final decision on the matter after examining the response.
Japanese steel industry officials said the joint venture between the major iron ore suppliers could lead iron ore prices higher substantially.
The joint venture, which will encompass all current and future Western Australia iron ore assets and liabilities of the miners, will be owned 50:50 by BHP Billiton and Rio Tinto.
The companies believe the net present value of these production and development synergies will be in excess of $10bn.
But gaining regulatory approvals has held up the implementation of the joint venture, which was originally expected to be completed by mid-2010.