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China, Japan caution about Rio Tinto/BHP Billiton tie-up

Saturday, June 13th 2009 - 05:44 UTC
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The booming Chinese industry consumes more than half of global traded iron ore The booming Chinese industry consumes more than half of global traded iron ore

Australia's resource minister has dismissed threats of sanctions from China against its two largest mining firms Rio Tinto and BHP Billiton.

The threat came a week after Rio Tinto abandoned plans for a tie-up with Chinese state-owned firm Chinalco.

A Chinese minister said in the Sydney Morning Herald that Rio Tinto's alternative iron-ore deal with domestic rival BHP Billiton may be vetoed. China consumes more than half of globally traded iron-ore.

The Sydney Morning Herald newspaper said that China could impose trade sanctions against Rio and BHP if they went ahead with their planned joint iron-ore operation without the approval of Chinese competition agencies.

“According to China's anti-trust law, we can veto such a merger agreement if the concentration of overseas business operations will affect domestic market competition,” Ma Yu, the director of the foreign investment department at the Ministry of Commerce, was quoted as saying.

Last week's announcement of an iron-ore deal with Rio and BHP scuppered a deal between Rio and Chinalco that would have been China's largest foreign investment.

“Obviously China is disappointed. You can expect some angst but I believe we'll return to a normal commercial alliance,” Australian Resource Minister Martin Ferguson told ABC Television.

Japan's competition watchdog has said that it may also probe the joint venture between Rio and BHP. European steelmakers have called for similar action from the European Union.

Rio Tinto and BHP Billiton are the world's second and third largest iron-ore producers.

Categories: Economy, International.

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