Rio Tinto, BHP scrap co-marketing plan

By JANE WARDELL

posted: 43 DAYS 9 HOURS AGO

Text SizeAAA

LONDON -Rio Tinto PLC and BHP Billiton Ltd. said Thursday they will keep iron ore sales separate from a proposed joint mining venture, scrapping plans to co-market some of the ore after pressure from global steel makers.

The two Anglo-Australian miners — the world's No. 2 and No. 3 in the iron ore market — had raised the ire of customers, particularly Chinese steel mills, with their plan to pool all their iron ore assets in Western Australia state.

The move would save the pair billions as iron ore prices slide, but has worried customers already unhappy with reliance on the three major global producers, rounded out by world No. 1 Vale SA of Brazil.

Rio and BHP had attempted to appease the market by pledging to keep their marketing operations separate for at least 85 percent of output, but on Thursday backed down further, saying that all production would now be marketed separately.

"The two companies believe that this change will clarify the nature of the JV for customers and emphasize its focus on realizing significant production and development synergies," the pair said in a statement.

European steel makers have called for European Union antitrust regulators to probe the joint mining project, which was announced in June as Rio Tinto scrapped a $19.5 billion deal with China's Chinalco after opposition in Australia to a foreign state-backed enterprise owning a strategic stake in the country's biggest natural resource assets.

Earlier EU opposition to BHP's hostile $68 billion bid for Rio Tinto forced it to abandon the takeover attempt last year.

The European steel industry federation Eurofer — whose members include the world's biggest steel makers ArcelorMittal SA, ThyssenKrupp AG and Corus Group — said the joint venture isn't "much different from the effects which would have resulted" from last year's takeover bid.

Merging the Rio and BHP iron ore businesses is expected to take until next June to complete. The companies said Thursday that they remained on track to have a binding deal by Dec. 5, their original deadline.

Rio Tinto also announced a management and organisational shakeup on Thursday, including the reinstatement of its Diamonds and Minerals product group alongside the Iron Ore, Copper, Aluminium and Energy product groups.

Two of the five heads will be based in Australia, reflecting the importance of the companies base there, it said. Two others will be based in London, with the remaining head based in Montreal.

The shakeup involved three new appointments: Doug Ritchie as chief executive of Rio Tinto Energy, based in Brisbane; Andrew Harding as chief executive of Rio Tinto Copper, based in London; and Harry Kenyon-Slaney as chief executive of Rio Tinto Diamonds and Minerals, also based in London.

Sam Walsh and Jacynthe Cote remain the heads of Rio Tinto Iron Ore in Perth and Rio Tinto Alcan in Montreal, respectively.

2009-10-15 10:59:15