TATA Steel backs BHP merger with RioNovember 30th, 2007 - 2:06 pm ICT by admin
Melbourne, Nov.30 (ANI): TATA Steel, the world’s sixth-largest steel maker today backed BHP Billiton’s proposed merger with Rio Tinto, saying it was time for the industry to consolidate.
The Australian quoted TATA Steel Managing Director B. Muthuraman as saying that while there was concern about a combined entity driving market prices for iron ore up, a merger was a necessary outcome.
It is a natural thing to happen. It is good for the commodity industry, which has had serious cycles over the last 25-50 years. It is time, I think, that both the steel industry (and) the commodity industry consolidates assets. I believe, generally, that consolidation is good for the industry, and of course the steel industry is also trying to consolidate, Muthuraman said.
Rio Tinto has already knocked back a merger proposal of three BHP Billiton shares for every Rio Tinto share, which is valued at about 132 billion U.S. dollars, based on current share levels.
Vocal opposition to the merger has emerged from steel mills and lobby groups in Europe and Asia, including Brussels-based International Iron and Steel Institute, the China Iron and Steel Association and South Korean steel maker Posco.
The Chinese government has also said it is watching the merger process amid concerns a combined entity could have enormous control over global iron ore and other resource commodity prices.
Rio Tinto chief executive Tom Albanese is on the second day of an investor road show in Australia to sell the company’s independent growth path.
The company is not a producer of nickel, but Rio Tinto copper chief executive Bret Clayton said the group could potentially become a top ten producer of the commodity.
A merger would create a world dominant player in coal, iron ore, copper, aluminium, coal, with annual earnings in the region of U.S. 30 billion dollars. (ANI)
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