A mine of uncertainty

19 June 2009 By Una Galani Follow @ugalani

The iron ore deal which scuppered a tieup between Rio Tinto and China s stateowned Chinalco will almost certainly face regulatory scrutiny. But the joint venture looks unlikely to be blocked. Any sanctions China could impose on BHP and Rio could be selfharming.

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BHP Billiton and Rio Tinto have said they will discuss with Chinese authorities the potential regulatory issues surrounding their agreed Australian iron ore joint venture, following negative remarks from senior Chinese officials.

"According to China's antitrust law, we can veto such a merger agreement if the concentration of overseas business operations will affect domestic market competition," Ma Yu, the director of the foreign investment department at the Ministry of Commerce, told the Sydney Morning Herald.

Chen Yanhai, head of raw materials from the Ministry of Industry and Information Technology, told China's state media that the joint venture had an obvious colour of monopoly and should be subject to China's antimonopoly laws.

Earlier this month, Rio scrapped a $19.5bn tieup with a Chinese stateowned aluminium group in favour of a $15bn rights issue and an iron ore joint venture with BHP. The move followed opposition to the deal from Rio's shareholders.

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