Share Dealing
Bluechip Bulletin: BHP and Rio Tinto end joint venture
Rob Langston, 03 December 2010
Miners BHP Billiton and Rio Tinto have ended their iron ore production joint venture after just over one year since agreeing to join forces.
The agreement for a production joint venture to cover both companies' iron ore assets in Western Australia was struck in June 2009.
However, the joint venture has ended after the both firms said it was apparent that it may not gain regulatory approvals.
It was understood that regulators including the European Commission, Australian Competition and Consumer Commission, and Japan Fair Trade Commission would not approve the scheme.
Tom Albanese, chief executive, Rio Tinto, said, 'The full value of the synergies on offer from a 50:50 joint venture was a prize well worth pursuing.
'Both companies have worked hard together over the last 16 months in a positive spirit to demonstrate its pro-competitive effects and I am disappointed that ultimately the regulators did not agree with us.'
Marius Kloppers, chief executive officer at BHP Billiton, said, 'The large synergies from combining our west Australian iron ore assets with Rio Tinto's have caused us to persevere in seeking to obtain regulatory approvals.
'However, it has become clear that this transaction is unlikely to obtain the necessary approvals to allow the deal to close and as a result both parties have reluctantly agreed to terminate the agreement.'
Kloppers said it had been agreed that no break fee would payable as a result of the early end of the joint venture.
BHP Billiton said it would continue to invest in its iron ore business in the region.
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