BRUSSELS (TheStreet) -- The joint venture between Rio Tinto (RTP) and BHP Billiton (BHP) - Get Report to share the cost of mining iron ore in Western Australia will feel antitrust heat from the European Commission.
On Monday, the European Union's executive arm said it had begun investigating the linkup between the two Aussie mining giants, under a deal inked in early December. In a press release, the commission said it will "examine whether the joint venture would have a negative effect on competition on the worldwide market for seaborne iron ore."
Doubtless, the news out of Brussels has made China's steel industry -- the world's largest -- happy.
Last year, Chinese steel officials made a series of public rumblings, asking the world's antitrust cops to please scrutinize the linkup between Rio and BHP, the second and third largest iron ore extractors on earth, behind No. 1 Vale, of Brazil.
To be fair, European steelmakers raised similar worries in November about the joint venture's ability to control world iron ore pricing, much as a merger between the two companies threatened to do in 2008, before the combination fell through.
It's the latest chapter in an ongoing drama that has made iron ore -- prime ingredient in the manufacture of steel, the substance that has in many ways epitomized China's explosive growth even amid a global recession -- into a rock capable of inciting international incidents.
Amid contentious price negotiations last year between the three iron-ore giants and Chinese steel chieftains for the annual benchmark iron ore contract, Rio Tinto executives were arrested in China under accusations of espionage.
That incident came after Rio backed away from a deal to let the Chinese state-run aluminum giant Chinalco buy a big stake in the miner. Home-grown political angst over the prospect of foreign ownership appears to have at least partly motivated Rio's decision to scuttle the Chinalco deal. The company had been struggling with an onerous debt load amid crashing world economies early in 2009 and badly needed cash, so it turned from Chinalco to BHP, its one-time merger partner.
Rio was also able to raise capital in the equities markets a little later in the year.
The EU has dogged the two Australian miners before. In 2008, the same Brussels antitrust unit helped blow up the proposed merger between BHP and Rio.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.