Japanese Steels Try to Block West Australian Iron Ore Integration

Japanese integrated steel makers strongly try to block the iron ore business integration in West Australia between BHP Billiton and Rio Tinto. If the merger comes off, iron ore price rises more and higher iron ore price impacts the steel users. Steel makers will enlist helps from the steel users or the fair trade commissions and show the disapprovals against the integration.

Rio Tinto and BHP Billiton met the concerns of Japanese steel makers and Japan Iron & Steel Federation in Tokyo in mid February. Rio Tinto and BHP Billiton explained the both companies continue to separate each sales division even after the business integration and the merger doesn’t impact on the steel users.

The both companies expect the integration effect would reach 1 trillion yen and the merger enables the additional iron ore output expansion by maximum 100 million tonnes per year for 2012-2018. The majors appealed the merger could also bring positive factors to steel makers such as the iron ore supply expansion and the material price down.

However, the both companies couldn’t win understandings from Japanese steel makers. Japanese steel maker source said steel makers couldn’t clear up doubts about the anticompetitive effect by the merger and the meeting didn’t change the steel makers’ disapproving stances.