Skip to main content

Rio Tinto, BHP End Iron Ore Venture

Rio Tinto and BHP Billiton have ended a $120 billion joint venture that would have formed the world's largest iron ore producer.

NEW YORK (

TheStreet

) --

Rio Tinto

(RIO) - Get Rio Tinto Plc Report

and

BHP Billiton

(BHP) - Get BHP Group Ltd. Report

have ended plans to form the world's largest iron ore producer.

The companies said they scrapped the $120 billion joint venture in the Pilbara region in Western Australia after being advised the proposal wouldn't be approved in its current form by regulators in Europe, Australia, Japan, South Korea and Germany.

TheStreet Recommends

Rio Tinto, in a press release, said some regulators indicated "they would require substantial remedies that would be unacceptable to both parties, including divestments, whereas others have indicated they would be likely to prohibit the transaction outright."

"The full value of the synergies on offer from a 50:50 joint venture was a prize well worth pursuing," said Tom Albanese, Rio CEO, in a statement Monday. "Both companies have worked hard together over the last 16 months in a positive spirit to demonstrate its pro-competitive effects and I am disappointed that ultimately the regulators did not agree with us. "

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 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. "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."

-- Written by Joseph Woelfel

>To contact the writer of this article, click here:

Joseph Woelfel

>To submit a news tip, send an email to:

tips@thestreet.com

.

Copyright 2010 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.