EUROFER, the European steel industry''s representative body, yesterday added its voice to the call for closer scrutiny of the BHP Billiton , Rio Tinto iron ore joint venture, warning that the new company might have an impact on steel prices.
The European steel industry restates its "strong reservations" against the joint venture of the iron ore companies BHP Billiton and Rio Tinto, which now has been signed by the two mining giants, Eurofer said in a statement.
"The joint venture which has been agreed by BHP Billiton and Rio Tinto will combine their production and infrastructure facilities and will unavoidably lead to market concentration and an increase in pricing power of the combined company which is unacceptable in competition terms," said Eurofer director general Gordon Moffat.
"We believe that this is a full-function joint venture which will not be different from the full merger attempted last year. It must be fully examined by the European competition authorities," Moffat added.
Eurofer has already asked the European Commission to reject the joint venture.
Earlier yesterday the World Steel Association called for competition authorities to thoroughly examine the impact of the proposed joint venture.
The association said in a statement that the steel industry believes competition must be preserved in the iron ore market.
Speaking on behalf of steel producers, the association''s director general Ian Christmas said the recently signed binding agreement between Rio Tinto and BHP Billiton was not materially different from the proposal issued earlier this year.
"It still carries a great danger of restricting competition thus reducing consumers'' choice as it would create an entity whose controlling position in the world''s seaborne iron ore market would become even less fair than the unsatisfactory position that exists today. The proposed JV would simply turn an oligopoly of three players into a duopoly," Christmas warned.
Last year the world''s three largest iron ore producers - Vale, Rio Tinto and BHP Billiton, held a 68.5% share of the global seaborne iron ore market.
Of that market share Vale held 32.8%, Rio Tinto 18.6% and BHP Billiton 17.1%.
The association is suggesting that instead of having three large players, the market would now have two each with between 32% and 35% of the market share.
"Competition makes a market strong and brings efficiency. Competition between steel companies has made the global steel market healthier and brought benefits for steel customers," said Christmas.
"As a result, this has promoted growth in steel use which serves society as a whole. We view this revised proposed JV as potentially extremely harmful to the market, and we call for a very careful review by all the relevant competition authorities," he said.