Tatas say BHP’s Rio offer is bad for industry

Tatas say BHP’s Rio offer is bad for industry
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First Published: Tue, Dec 04 2007. 01 27 AM IST
Updated: Tue, Dec 04 2007. 01 27 AM IST
London: Melbourne-based BHP Billiton Ltd’s proposed $134 billion (Rs5.32 trillion) bid for Rio Tinto is bad for the steel industry, said a unit of Tata Steel Ltd, India’s oldest manufacturer of the metal.
The combination would create a mining giant that could vie with Brazil’s Cia Vale do Rio Doce as the world’s largest producer of iron ore, a key steel making ingredient. Iron ore prices have tripled in the past five years on rising Chinese demand, and may rise 50% next year, Macquarie Group Ltd had said last month.
“When two players control 70% of the market, it’s too much for us as a steel producer,” Philippe Varin, chief executive officer of Tata’s Corus unit, said on Monday at a Paris conference. “It’s not good for the steel industry.”
BHP’s bid has angered customers, including Posco Ltd, Korea’s biggest steel maker, and JFE Steel Corp., ranked third worldwide, who say it should be blocked by regulators to damp further increases in iron ore prices.
BHP said it wants access to more reserves of the ore to meet rising demand in China, the world’s biggest steel consumer.
“I would expect that the antitrust authorities in Europe, Japan and the US will take some action to prevent this takeover,” Varin said at the conference organized by Metal Bulletin and World Steel Dynamics. “We are anticipating a significant increase in the cost of raw materials next year, driven by demand in China.”
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First Published: Tue, Dec 04 2007. 01 27 AM IST