Rio Tinto Facing Problems with Iron Ore Deals

Rio Tinto seems to be facing problems with alliances and proposed alliances everywhere. A proposed iron ore venture with BHP Billiton Ltd may be voted down by the Rio Tinto Group shareholders as they do not agree to the current terms of payment.

BHP Billiton has agreed to pay Rio $5.8 billion to equalize the contribution of assets to the venture. The 50/50 partnership between the second largest and third largest iron ore exporters in the world is being opposed by steelmakers in Europe and Asia.

The two companies plan to share mines, railroads, ports and workforces in Western Australia to help save $10 billion in the joint venture. The deal is yet to meet with regulatory approval. Another agreement with Kerry Stokes’ Iron Ore Holdings Ltd. with Rio Tinto Ltd. is also in jeopardy.

Iron Ore Holdings was under an agreement to sell Rio Tinto iron ore worth 1.5 million tonnes from its Phils Creek project in Western Australia’s Pilbara region. While the agreement was signed in last December the two parties have been unable to agree to the terms of access. If they do not have an understanding by August 8, 2010 the sales agreement will terminate.

Joel Scanlon

Written by

Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.


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