find yours and get on them; june for iron ore, page-28

Barnett fuming over Rio-BHP ore deal

Posted Fri Jun 5, 2009 3:08pm AEST
Updated Fri Jun 5, 2009 3:13pm AEST


Colin Barnett ... concerned about concentration of ownership. (File photo)

Audio: Rio walks away from deal with Chinalco (The World Today) Related Story: Chinalco deal falls over as BHP steps up Related Story: Rio scraps Chinalco deal: reports Related Story: BHP, Rio clinch $7.2b iron ore deal BHP Billiton is realising its long-held desire to combine its Western Australian iron ore assets with Rio Tinto's in a 50-50 joint venture.

But Western Australian Premier Colin Barnett is not happy with the deal and believes it has been designed so the companies can avoid paying about $1 billion in stamp duty.

The plan requires several layers of regulatory approval and Mr Barnett says re-negotiating multiple state agreement acts will be the companies' first hurdle.

"I have a concern about the iron ore resource of the Pilbara, the world's second largest iron ore resource, basically being in the hands of one company," he said.

"What I'm saying is ... apart from jobs, the two financial issues that the State Government places on the table today is the payment of stamp duty and paying full price for royalties.

"The days of selling iron ore cheap have gone."

The merger of the businesses comes after Rio abandoned its $24.3 billion alliance with Chinalco.

BHP will pay $7.2 billion to Rio as part of the deal, which needs shareholder and regulatory approval.

BHP's chief executive Marius Kloppers says he has personally spent about two years working on the deal.

"Rio Tinto and BHP Billiton have at various times looked at creating an iron ore joint venture in Australia - I think for over a decade - so while this deal has been more than 10 years in the making, I believe it is worth the wait," he said.

The share market has reacted favourably to the deal; at 3:00pm AEST both Rio and BHP shares were up about 8 per cent.

Prime Minister Kevin Rudd says Australia remains open to Chinese investment despite the deal collapsing.

"We welcome Chinese investment in Australia just as the previous government approved some $15 billion of Chinese investment in this country," he said.

Mr Rudd says the deal collapsed due to commercial reasons.

"What's occurred most recently is an entirely commercial matter between Rio on the one hand and Chinalco on the other - that's the truth of it, that's what's happened here," he said.

"The Government maintains a policy of openness towards foreign investment.

"It's a commercial matter and I think it's very important that our friends in China focus on that fact."