Japan Steel Official Reaffirms Opposition to BHP & Rio Merger

JFE Steel’s president Hajime Bada said on Wednesday he reaffirms the opposition to BHP Billiton’s acquisition of Rio Tinto. The chairman of Japan Iron and Steel Federation said 70% control of iron ore seaborne trade by major 2 companies including Vale is almost monopoly. He expects competition authorities in Australia, Europe and Japan would reject the merger to prevent excessive concentration. Mr. Bada gave speech at Foreign Correspondents’ Club of Japan in Tokyo. He said the firm opposes the merger of mineral majors through Japan Iron and Steel Federation and International Iron and Steel Institute while Japanese steel industry encourages Japanese competition authority to oppose the merger. Mr. Bada said iron ore price negotiation for fiscal 2008 is very tough for steel makers under tight supply. He indicated steel makers try to minimize the price hike but the price could increase by certain level. Mr. Bada said JFE Steel’s financial position regained healthy status when the debt decreases to 80% of equity compared with 370% at the start of the integrated entity, which combined NKK and Kawasaki Steel. He indicated the firm would focus more on growth strategy, instead of better financial position. He said the firm’s top priority is to follow demand growth in high end steel market for better corporate value while other makers could just seek volume expansion through merger and acquisition.