S. Korea, EU concerned over BHPB-Rio Tinto tie-up
March 21, 2010 11:30 am
SEOUL, March 20 — South Korea and the European Union on Friday expressed concern over an iron ore production tie-up between resource giants BHP Billiton (BHPB) and Rio Tinto at a meeting in Seoul, government officials said.
The Ministry of Knowledge Economy said officials and business executives at a joint meeting claimed the agreement between the two Australian-British multinationals could have an adverse effect on the global iron ore supply.
The mining and resources companies that announced their plan to merge production-related operations in October 2009 control 38 percent of the global iron ore supply. Their merger could lead to market concentration and a strengthening of global pricing power by BHPH-Rio Tinto, threatening fair competition.
"Both sides reached a general understanding that the proposed tie-up can have an adverse effect on the steel industry," a ministry official said on condition of anonymity after the meeting. Both South Korean and European anti-trust agencies are reviewing the merger proposal to see if the plan could hurt fair competition or be construed as a legitimate business activity.
"With regard to the European Union, this process may take time," she said.
The concerns expressed at the one-day joint government-private sector meeting follow objections raised last year by the Korea Iron and Steel Association and Eurofer, the umbrella organization for European steelmakers.
In addition, South Korean and European officials at the meeting called for abstaining from actions that could obstruct fair business practices and to remove unreasonable import restrictions that adversely affect trade.
Trade in steel products between the two sides plunged nearly 24 percent on-year in 2009, with South Korea exporting 1,242 tons and importing 687 tons.
At the meeting, South Korea and European partners also said they will work together to find solutions to reducing greenhouse gases created at steel mills and related production facilities.
Representatives from the EU expressed concerns over a possible supply glut in the global industry, caused by the opening last year of an integrated steel mill by Hyundai Steel Co. South Korean officials, however, dismissed the concerns, saying the new capacity is intended to meet local demand for steel products.
European countries have launched the Ulcos Project, which aims to cut carbon dioxide output by 50-60 percent by 2050, while Seoul says it will start development this year on technologies that can reduce greenhouse gas emissions.
The meeting was attended by 20 representatives from Seoul and Brussels, including such companies as POSCO, Hyundai, ArcelorMittal and Dillinger.
Lee Seung-woo, head of the ministry's steel and chemical industry division, represented South Korea at the meeting, while the EU delegation was headed by Peter Klein, a trade representative for the European Commission, the executive body of the EU. (PNA/Yonhap)
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