PERTH (miningweekly.com) – Diversified mining group Rio Tinto CEO Tom Albanese on Friday refuted claims that its iron-ore joint venture (JV) with fellow-miner BHP Billiton was “dead in the water”.
“I don’t even know where that came from,” Albanese told newswire Dow Jones.
A spokesperson for Rio Tinto, Gervase Greene, told Mining Weekly Online that Rio remained committed to the Pilbara JV.
“We are still working hard to satisfy the regulatory processes and the matter is with the regulators at the moment.”
Meanwhile, Bloomberg quoted Albanese as saying that Rio was seeking approval from countries, including China, for the proposed iron-ore JV with BHP.
This comes after a report in Australia’s Sydney Morning Herald quoted unnamed sources as saying the A$130-billion Pilbara JV was “dead”.
"It died months ago," a senior mining executive involved in the discussions with regulators told the newspaper.
"It's dead and the coffin's being lowered into the ground. It's a matter of finding a face-saving way out in the coming few months."
Albanese told Bloomberg in Shanghai that the technical argument for the venture continued to be “strong”. “The synergies are indisputable and are large. They are a prize that’s worth everything we can do to achieve.”
BHP Billiton on Friday declined to comment on the speculation.
The proposed Pilbara JV has faced a number of regulatory delays, the latest in July, when the Australian Consumer and Competitions Commission (ACCC) suspended the July 22 deadline for its ruling on the proposed JV of the iron-ore assets.
The ACCC said that the suspension had been done at the request of the companies, as they wished to make additional submissions.
The ACCC has delayed publishing its findings several times, after initially stating that it would do so on February 24.
In March, the public protector invited further market submissions, as it raised concerns about the proposed iron-ore JV between BHP and Rio.
This came as Australia’s only significant iron-ore purchaser, BlueScope Steel, publicly raised concerns about the proposed JV, and possible changes to the expansion plans of existing and potential competitors of the proposed JV entity.
The ACCC said, at the time, that it would investigate if the proposed JV would have the ability and incentive to profitably withhold supply from iron-ore market and whether the JV entity and Brazil’s Vale would have an increased ability to coordinate their supply decisions.
Vale is the world's largest producer of iron-ore and would be the proposed JV's main competitor.
The Royal Bank of Scotland has also speculated that the proposed iron-ore JV would not meet with Rio Tinto shareholder approval, owing to their unease with the structure of the “equalisation payment”.
The JV is also dependent on European and Chinese regulatory approvals.
The proposed JV would encompass all current and future Western Australian iron-ore assets and liabilities, with BHP expected to pay Rio $5,8-billion to take its interest in the JV to 50%.
The companies abandoned a plan to jointly market the iron-ore from the JV. An initial agreement detailed that up to 15% of production would have been sold by the JV, independent of Rio Tinto and BHP Billiton.