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Steel body hits out at move by ore miners

CHINA'S steel industry group yesterday denounced a plan by Rio Tinto and BHP Billiton to combine their iron ore mines, calling the move "monopolistic" as it joined other steel bodies to defend their interests.

Debt-laden Rio last week rejected a US$19.5-billion investment by Aluminum Corporation of China, or Chinalco, and opted instead for a rights issue and form a joint venture with former suitor BHP to link their Western Australian iron ore assets.

The plan would save costs for the miners but may threaten the interests of global steel customers. A combination of Rio and BHP, the world's No. 2 and No. 3 iron ore suppliers, would put them ahead of Brazil's Vale, though they said they would maintain their separate sales.

"Chinese steel companies firmly resist any monopolistic obstacles in the international iron ore trade," the China Iron and Steel Association said.

The Brussels-based World Steel Association and the Japan Iron and Steel Federation have also opposed the venture plan and called for a serious examination by competition regulators. Analysts say the Australian government and shareholders are likely to allow the deal, which must also be approved by the European Union. The EU last year blocked BHP's previous hostile takeover for Rio.

In response to a question about Rio's withdrawal from the deal with Chinalco, China's Foreign Ministry spokesman Qin Gang yesterday said Chinese companies will continue to pursue the principle of equality, mutual benefit, friendship and honesty in carrying out trade and investment outside China.

The CISA also asked authorities to terminate business licenses of some new domestic iron ore trade centers, which it says are used for speculative trading. It didn't name any but is apparently referring to an ore trading center in Rizhao, Shandong Province, launched last month.

Yin Deyong, a spokesman for Rizhao Zhongrui Group, which jointly funded the formation of the center, said the CISA may have misunderstood the center's operations.

The center provides electronic commerce services, including information exchange, insurance, and settlement for iron ore suppliers and steel mills as it aims to establish China's own price index to reflect its role as a top buyer, Xinhua news agency has said.


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