Australian Gov’t Warned By BHP Of Risks In Refusing Rio Tinto Bid

The world’s biggest miner, BHP Billiton (BHP) – in its continued hostile bid for mega-miner Rio Tinto (RTP), according to UK’s Media Group Telegraph – has warned the Australian government of the country’s natural resources running the risk of being owned by the Chinese ; if regulators do not act and allow the miner to take over Rio Tinto.

It’s rather a logical reality of China’s objections against a BHP/Rio Tinto merger. Beijing wants to make sure that BHP Billiton’s attempted takeover doesn’t work out. More than anything, China wants cheap and easy access to minerals to help support its rapidly-industrializing economy, that’s why it doesn’t want the creation of a monopoly miner with almost absolute pricing power, dominating the market.

Many large resource companies, such as BHP Billiton, – are based in home-grown resource positions, said chairman of BHP Don Argus. Australia’s position, he continued – in the global resource industry is not guaranteed, and our current natural resource champions could fall into the hands of overseas consolidators.

The world has state-owned or state-supported players from Russia and China and Brazil and private companies. I don’t believe it’s in anyone’s interests, added Argus – not to have a global countervailing force against state-sponsored resources majors.

BHP’s chairman also pointed out on the possibility of Australia following Canada’s example, which has seen most of its resource companies snapped up by foreign buyers.

But besides its own government obstacles, BHP also faces an uphill battle with the European regulators. The European Commission has already opened an “in-depth” antitrust probe into BHP’s hostile takeover bid of rival Rio Tinto. The probe implies serious doubts the deal could interrupt competition amid spiking commodities prices. The Brussels-based International Iron and Steel Institute (IISI) has also called on antitrust regulators to block the merger of the two co’s, stating – that such a deal would create virtually a monopoly in iron ore mining.

About Ron Haruni 1036 Articles
Ron is the Co-Founder & Editor in Chief of Wall Street Pit. Web Site: Wall Street Pit

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