The announcement marked the second failed attempt in three years by BHP chief executive Marius Kloppers to buy into Rio’s superior iron ore assets, and strengthens the hand of steel mills which feared the pair would gain too much pricing control.
The long-expected news also left BHP focusing squarely on a $39bn (£24.5bn) hostile bid for fertiliser group Potash, no longer distracted by the $116bn marriage of the two miners’ mammoth Australian iron ore operations. A joint venture between Rio and BHP, the world’s second and third largest iron ore miners, would have eclipsed Brazil’s Vale, the largest, and would have reaped more than $10bn in savings from combining rail and port operations.
A number of City firms including Credit Suisse, Morgan Stanley and Macquarie will miss out on fees from Rio, while Lazards and Gresham Partners were signed up to advise BHP.
BHP and Rio had a fall-back option to share some iron ore infrastructure in the event the full joint venture failed, but this “Plan B” is also in doubt following the strength of opposition.