CHINA slammed the proposed tie-up between mining giants Rio Tinto and BHP Billiton yesterday, saying it had “a strong monopolistic flavour,” and threatened to use its new antitrust laws to derail the venture.
“The deal between Rio and BHP should be subject to Chinese anti-monopoly law,” the Chinese Ministry of Industry and Information Technology said.
According to China’s anti-monopoly law, all business combinations that have dealings with the state must be cleared by the ministry if the global revenue of the firms involved exceed 10bn yuan (£1bn) or 2bn yuan in China.
It added that, if the tie-up was found to be monopolist, China would seek to ensure Chinese firms had a bigger say in iron ore pricing talks.
BHP and Rio are the world’s second and third-biggest producers of iron ore – steel’s key ingredient. Together they supply 75 per cent of China’s iron ore imports from their vast, adjacent operations in Australia’s Pilbara region.
Rio Tinto scrapped its $19.5bn (£13.6bn) deal with Chinese metals group Chinalco two weeks ago in the face of investor pressure and instead raised $21bn via a rights issue and announced the iron ore joint venture with BHP.
To cut regulatory problems, the firms say they will independently sell the ore produced as part of the deal.
The news comes as the communist powerhouse issued a “buy China” decree as part of a £400bn government stimulus package. The order will fuel tensions between East and West as accusations of protectionism are bandied about in the downturn.