Rio’s deal with BHP on iron ore hits a hurdle

MINING group Rio Tinto has made no decision on its planned $116bn (£72.9bn) Australian joint venture with BHP Billiton, it said yesterday after claims that the deal could be terminated.

“The Rio Tinto board has not made any final decisions about possible outcomes or next steps relating to the proposed Rio Tinto/BHP Billiton iron ore production joint venture in western Australia,” Rio said in a statement.

Earlier claims said Rio was preparing to walk away from the deal.

It is understood that Rio chairman Jan du Plessis informed fellow directors on Monday he did not think BHP would object to Rio ending the deal.

Rio said the BHP deal had been discussed during a board meeting on 4 October. “The board acknowledged recent communications from regulators that indicate potential obstacles to achieving clearance for the joint venture,” it said in its statement.

Some shareholders of Rio – the world’s second largest iron ore miner – have complained that BHP should pay more than the agreed $5.8bn to Rio as part of the JV, which envisages a 50-50 partnership.

The payment accounts for the fact that Rio is bigger in iron ore than BHP.