UPDATE: China Assoc Opposes BHP-Rio Iron Ore Joint Venture
June 09 2009 - 7:10AM
Dow Jones News
The China Iron and Steel Association said Tuesday it strongly
opposes the iron ore joint venture announced Friday by Rio Tinto
PLC (RTP) and BHP Billiton Ltd. (BHP), according to a statement on
the association's Web site.
"The joint venture agreement goes in the direction of a
monopoly," the statement said, adding the association would "resist
monopolistic ways."
The association suggested China should have a say in global iron
ore trading as it is Australia's largest customer for iron ore
exports.
"The BHP-Rio deal is tied to Chinese companies' interests," the
association said.
In addition, the statement also warned local iron ore traders
from seeking to profit from speculation in the iron ore trade.
The association said it would suspend the iron ore import
licenses of those found to have resold imported ore at a
profit.
China has sought to curb high ore imports in recent months;
preliminary figures from the Ministry of Transportation released
Tuesday suggest the country could have imported 55.5 million metric
tons of iron ore in May, up 25% on year.
The statement also said iron ore trading centers, which were set
up as a transparent pricing mechanism, violate China's national
steel industry plan enacted earlier this year.
China's first iron ore trading center, which seeks to set an
iron ore price index, opened last month in the Chinese port city of
Rizhao in Shandong province.
The association said China's regulators should terminate the
trading center's business license.
The association's latest statement adds to a growing list of
sharply worded official postures forbidding efforts to break an
impasse with global miners over the 2009-10 iron ore term
price.
The association's secretary-general, Shan Shanghua, told Chinese
media last week Chinese steelmakers had no right to negotiate iron
ore prices individually with overseas miners and any separate
agreements reached with miners would be invalid.
He added China wouldn't accept any iron ore term price cut from
miners less than 40% of last year's benchmark. Miners have set the
benchmark rate with most Asian customers at a 33% cut.
-Juan Chen and Chuin-Wei Yap contributed to this report, Dow
Jones Newswires; 8610 6588 5848; juan.chen@dowjones.com