China threatens to block Rio-BHP deal

BEIJING: China has thrown the spanner in the works of the world iron ore market and almost threatened to block the proposed JV between Australian 
mining giants Rio Tinto and BHP Billiton. Beijing said it will apply the anti-monopoly law if their total revenue exceeds a certain amount.

The move comes soon after Rio rejected an investment offer from China and chose to sleep with old rival, BHP. Besides being bitter over the rejection, China suspects the Australian giants of hatching a dark ploy to deny it the right to influence market pricing.

The proposed JV has ¡°a strong monopolistic flavour¡¯¡¯, a spokesman of the Chinese ministry of industry and IT said on Wednesday. ¡°The deal should be subject to Chinese anti-monopoly law,¡¯¡¯ Chen Yanhai, the ministry official said. ¡°The JV is likely to have a big impact on Chinese steel industry as China is the world¡¯s biggest iron ore importer,¡¯¡¯ he said.

If the anti-monopoly law is applied, both companies will find it difficult to profitably operate in China¡ªthe world¡¯s biggest buyer of iron ore. China also buys substantial quantities of it from India. Beijing¡¯s actions against Australian suppliers, who control one-third of the world market, might have an impact on Indian exports as well.

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