Nippon Chairman Concerned about Rio-BHP Deal

Submitted by Jim Thesiger on 11 November, 2009 - 06:30

Akio Mimura, the chairman of Nippon Steel have expressed his concerns regarding the future market condition which might see significant developments due to an iron ore merger deal which is expected to be signed among Rio Tinto (RIO) and BHP Billiton (BHP), two internationally renowned mining giants. Mr. Mimura is currently pressuring on the Premier of West Australia Colin Barnett to resist the possible merger among the two companies as he believes the agreement might harm the fair trading environment in the global market and could have negative impact on the Japan-Australia trade relationship.

Mr. Mimura’s comments came after Mr. Barnett met with the chief executive of BHP Marius Kloppers and CEO of Rio Tinto Tom Albanese the other night where they discussed about the demands made by the Government regarding an increased rate of royalties which is to be included as a part of any jointly operated production. It is to be mentioned that 3 percent steel of the world is currently being produced by Mr. Mimura’s company. The Nippon Steel chairman also stated that nationalism and colonialism of resources could pose major threat to the Japanese and Australian trade relation as well.

In June, Rio Tinto and BHP Billiton revealed their plan of merging their West Australian iron ore assets in an attempt to save $10 billion in synergies. Mr. Albanese who was present at the same conference where Mr. Mimura gave his speech stated that BHP-Rio agreement would help the companies to get into a better position to deal with the future increase in demand of iron. Mr. Barnett in his statement mentioned that he could not stop the two miners from signing a deal but also reminded that the iron ore of Western Australia belongs to the people and the companies would require a state agreement along with state legislative changes in order to go for the deal.