Rio Tinto and BHP Billiton have scrapped plans for a $120 billion iron ore joint venture in the remote Outback after antitrust regulators in Australia, Europe and Asia opposed it or demanded changes.
The cancellation on Monday of the joint venture proposed in the Pilbara region of Western Australia state came as little surprise to markets, because problems with some regulators were already well known. In Australia, Rio Tinto was trading fractionally higher at Australian dollars 83.22 after the news broke, while BHP Billiton declined less than 1 percent to AU$41.47.
BHP and Rio Tinto had hoped to save at least $10 billion by combining their operations in the Pilbara, a remote region rich in iron ore and other minerals but where mining companies spend many millions on rail, ports and other infrastructure.
The companies said in a joint statement issued Monday they were ending their plans after being advised that the proposal would not be approved in its current form by the European Commission, the Australian Competition and Consumer Commission and the fair trade commissions of Japan and South Korea.
Some regulators opposed the plans outright, while others sought substantial changes that were unacceptable to Rio Tinto and BHP Billiton, the companies said.
"The large synergies from combining our West Australian iron ore assets with Rio Tinto's have caused us to persevere in seeking to obtain regulatory approvals," BHP Billiton CEO Marius Kloppers said in a separate statement to the stock exchange.
"However, it has become clear that this transaction is unlikely to obtain the necessary approvals to allow the deal to close and as a result both parties have reluctantly agreed to terminate the agreement."