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December 7, 2009

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Rio and BHP to merge iron ore assets

MINING companies Rio Tinto Plc and BHP Billiton Ltd said over the weekend they have signed binding agreements to combine their Western Australian iron ore assets.

A joint news release said each company would take a 50 percent stake, and that they expect savings of at least US$10 billion by combining their operations. Rio Tinto and BHP Billiton will sell their iron ore output separately.

The joint mining project between the two companies - the world's No. 2 and No. 3 in the iron ore market - was first announced in June.

It came as Rio Tinto said it was scrapping a US$19.5 billion deal with China's Chinalco after Australian opposition to a foreign state-backed enterprise owning a strategic stake in the country's biggest natural resource assets.

The deal between Rio and BHP has not been without opposition as last month European steel makers called for European Union antitrust regulators to probe the joint mining project, and last year, EU opposition to a hostile bid by BHP for Rio Tinto forced it to abandon a takeover attempt.


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