Doubts grow over Rio/BHP Pilbara deal

5th Oct 2010 18:06

Rio Tinto has cast more doubt that the merger of its West Australia iron ore business with BHP Billiton's will go ahead.In a statement, Rio said no final decision had been made but conceded that the planned deal still faces regulatory hurdles. Rio held a board meeting on Monday to discuss the merger and specifically the "recent communications from regulators that indicate potential obstacles to achieving clearance for the joint venture". The miner has received interim reports from the Japan Fair Trade Commission and the Korea Fair Trade Commission, while discussions were ongoing with the European Commission and the Australian Competition and Consumer Commission. It is the concerns of the Europeans that are the major concern, reports today said. Steel makers have complained bitterly that the deal would mean too much power is concentrated in the hands of one producer. Rio and BHP already control 40% of the world's iron ore production. Talks over the merger have already been underway for more than a year, but have stalled recently with BHP Billiton turning its attention to Canadian group Potash. Rio and BHP's assets are both in Australia's Pilbara region and could generate estimated annual savings of $10bn through a pooling of their infrastructure.Australian media sources also said that improving financial fortunes had prompted Rio to reassess the deal.