BHP-Rio merger would push up iron ore prices, says Australian regulator

Mumbai: A merger of BHP Billiton and Rio Tinto might significantly influence global iron-ore supply and prices, Australia's competition watchdog has warned.

This could lead to steelmakers in Australia paying ''significantly'' higher prices for the raw material, the Australian Competition & Consumer Commission (ACCC) said.

The ACCC has issued a `Statement of Issues' on the proposed acquisition of Rio Tinto Ltd and Rio Tinto plc by BHP Billiton Ltd and has sought more clarifications on certain issues.

''The recent rapid industrialisation of China and India has resulted in unanticipated growth in the demand for iron ore. With the production of most incumbent seaborne iron ore suppliers being fully committed, this demand growth has triggered increased iron ore exploration activity in Australia and elsewhere and necessitated the commencement of supply by small iron ore suppliers with relatively high marginal costs.

As a result of high cost iron ore coming into production, there have been substantial increases in spot and benchmark prices for all forms of iron ore,'' ACCC said in the website release and has sought public comments.

''Significant quantities of iron ore are supplied in Australia at prices that are linked to global iron ore prices. Global iron ore prices therefore have a direct effect on Australian steel makers.