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December 19, 2009

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China steel sector hits out at Rio BHP deal

CHINA'S steel industry voiced opposition to a proposed joint mining venture between global mining giants Rio Tinto Ltd and BHP Billiton Ltd and called for global opposition against it.

The world's No. 2 and No. 3 in the iron ore market signed binding agreements earlier this month to combine their Western Australian iron-ore assets, with expected savings of at least US$10 billion.

"This is a monopoly in a disguised form, and it will greatly threaten the development of the global steel industry," the China Iron and Steel Association said in a statement posted online yesterday.

It called for countries to "block any attempt at a monopoly by Rio and BHP" by taking anti-monopoly measures.

China's Ministry of Commerce said on Wednesday that it hadn't received regulatory review applications from the two companies.

Australia is a key supplier of iron ore and other resources for China's fast-growing economy.

China, the world's largest iron ore importer, failed to reach an agreement with suppliers in price talks this year after the association insisted on a deeper price cut than Rio and BHP had agreed with other Asian countries.

Industrial analysts expect iron ore prices to rise about 10 to 20 percent next year on increasing demand as the world's economy recovers.

Rio and BHP said submissions had been made with both the European Union and the Australian Competition and Consumer Commission, and they expected to complete the deal in the second half of next year.

Last month, European steel makers called for EU antitrust regulators to investigate the project. In 2008, EU opposition to a hostile bid by BHP for Rio Tinto forced it to abandon a takeover attempt.


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