BRUSSELS (Commodity Online): The competition authorities should thoroughly examine the impact of the proposed joint venture between Rio Tinto and BHP Billiton, according to the World Steel Association (worldsteel).

Speaking on behalf of steel producers worldwide, worldsteel Director General Ian Christmas said: “The recently signed binding agreement between Rio Tinto and BHP Billiton is 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.”

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As on 2008, Vale of Brazil holds 32.8% of sea-borne iron ore market while Rio controls 18.6% amd BHP 17%. Vale controls virtually the whole of the Brazilian iron ore export industry. A JV of BHP Billiton and Rio Tinto’s Western Australia iron ore interests would similarly control Australian iron ore exports. A consequence of allowing BHP Billiton and Rio Tinto to merge their Western Australia iron ore interests into a JV, would result in almost 70% of world seaborne iron ore exports being controlled by the new JV and Vale, worldsteel said.

Continuing, Ian Christmas said: “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. 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.”