From Financial Times
 

Rio Tinto has conceded that regulatory obstacles are mounting against its ambitious plans to merge its Australian iron ore operations with those of BHP Billiton, its competitor.

The admission came amid growing speculation that the proposed joint venture was being stymied by regulators amid strong opposition from the global steel industry, which fears the plan would give the two multinational miners increased pricing power.

Competition regulators around the world have expanded their scrutiny of the joint venture and pushed back deadlines on their rulings. One Australian media report has claimed the joint venture, first proposed in June 2009, was “dead”.

Rio said it had not made any final decisions on its plans with BHP. But during a Monday board meeting, the company added, directors had discussed “recent communications from regulators that indicate potential obstacles to achieving clearance for the joint venture.”

“This includes the recent receipt of interim reports from the Japan Fair Trade Commission and the Korea Fair Trade Commission, and ongoing discussions with the European Commission and the Australian Competition and Consumer Commission.”

The statement marks a further damping down of expectations about the 50-50 joint venture, which would shake up the iron ore and steel trade by creating the world’s biggest producer of iron ore.

In spite of being an operations-only merger of certain assets, the venture was the most important deal that either BHP or Rio were progressing until BHP unveiled its $39bn bid for Canada’s PotashCorp in August.

Tom Albanese, Rio’s chief executive, told the Financial Times in August: “I realise expectations have tuned down.”

Yet he maintained that both parties remained committed. “Yes, we should be trying to harvest the greatest synergies possible,” he said, referring to operational cost savings that Rio estimated were worth more than $10bn in June 2009. “But it is not going to be a walk in the park.”

http://www.ft.com/cms/s/0/459da452-d0c4-11df-8667-00144feabdc0.html