BHP-Rio Venture Should Be Blocked, World Steel Says

By Rebecca Keenan and Stephen Engle

Oct. 12 (Bloomberg) -- Rio Tinto Group and BHP Billiton Ltd.’s proposal to combine the iron ore operations of the world’s second- and third-biggest producers should be blocked by the European Commission, the World Steel Association said.

“As an industry, we would not be at all happy with the proposed consolidation,” Ian Christmas, director general of the association, said today in an interview in Beijing. Members in the group, which includes 19 of the biggest steelmakers, produce 85 percent of global output.

Rio and BHP in June agreed to combine their iron ore assets in Western Australia to save them more than $10 billion. An aborted takeover by BHP for Rio last year had faced an in-depth probe from the European Commission, which had “serious doubts” over a combination that would control more than a third of the world’s iron ore exports.

“Our colleagues in Europe are making cases on why it’s harmful to our steel customers,” Christmas said. “We don’t see any difference in the proposal in this regard so we are hoping there will be a similar thumbs down given.”

Western Australia provides 18 percent of the world’s iron ore. Melbourne-based BHP had dropped the bid for London-based Rio citing turmoil in global markets, slumping commodity demand and Rio’s debt.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Stephen Engle in Beijing at sengle1@bloomberg.net