Rio says BHP iron ore merger a 'live issue'
Mining giant Rio Tinto today said its troubled iron ore tie-up with BHP Billiton remained a "live issue", following widespread speculation it was facing collapse.business Updated: Oct 11, 2010 10:06 IST
Mining giant Rio Tinto on Monday said its troubled iron ore tie-up with BHP Billiton remained a "live issue", following widespread speculation it was facing collapse.
Rio iron ore chief Sam Walsh admitted winning regulatory approval for the merger was not easy but that "doesn't mean it's impossible" for the project to go ahead.
"(It's) still a live issue... It's a huge prize here -- 10 billion-odd (US dollars) in synergies. You don't walk away until you have actually given it the very best go," Walsh told Dow Jones Newswires.
Walsh said the origin of a leak from the company's board last week was "not clear". The source told Fairfax newspapers that Rio was poised to abandon the deal.
"I think people are trying to influence the outcome," he said.
Plans to combine operations in Western Australia, a major source of iron ore for Asia's steel mills, have roused anti-competition concerns among customers including China, the world's leading consumer.
Rio last week acknowledged "recent communications... that indicate potential obstacles", including from Japan, South Korea, Australia and Europe.
"What we have got to assess is the value of the deal against the dislocation or whatever of any potential comments from the regulators," Walsh said on Monday.
Fairfax last week said Rio now opposed the deal because of its improving financial performance and objections from shareholders, as well as a feeling that its terms favoured BHP.
Shareholders separately said some of the proposal's long-term benefits could still be achieved by the companies informally pooling their resources in the Pilbara region, if the tie-up was to ultimately collapse.
"There are other ways of skinning the cat and sharing some resources," Paul Xiradis, chief executive of Ausbil Dexia, among the top-10 shareholders in both companies, told the Wall Street Journal.