BHP Billiton, Rio Tinto Modify Australian Iron Ore JV Plan

BHP Billiton and Rio Tinto announced on Thursday they decided to sell iron ore separately by each company even after they establish a joint venture covering the entirety of both firms’ iron ore assets in Western Australia while they planned to sell iron ore through the joint venture up to 15% of the production under agreement in June. They expect the modification would be acceptable by iron ore buyers while they can focus on synergy for production and development. However, Japanese steel makers are seemed to oppose the plan even with the adjustment.

BHP Billiton and Rio Tinto announced on June they merge Western Australian iron ore business and establish a fifty-fifty joint venture by mid 2010. They estimated more than US$ 10 billion of synergy from the scheme.

Japanese steel makers hold back from commenting on Thursday. However, Japanese steels seem to opposite the merger when BHP Billiton and Rio Tinto dominate iron ore producing in Australia.