EUROFER deplores the 65% increase in iron ore prices as a further illustration of the danger of an over-concentration within the raw material supply chain

Merger between BHP Billiton and Rio Tinto will worsen the situation

EUROFER, the European Confederation of Iron and Steel Industries, criticizes the latest 65% increase in iron ore prices as just one of the symptoms of the market dominance by only a few mining companies of the seaborne market for iron ore and coking coal.
“Over-concentration in the supply chain of steelmakers has resulted in an explosion of prices. Ultimately, these extra costs will have to be passed on to the consumer. This will inevitably result in higher prices for steel in Europe and worldwide. We urge the European Commission and the Member States to react firmly on the BHP/Rio merger which is not in the interest of the consumer,” says Gordon Moffat, Director General of EUROFER. “The price rise of 65% which has just been announced comes before the proposed merger. Imagine the pricing power which these suppliers will have when trade is dominated by just two companies.”
The steel industry fears that a takeover of Rio Tinto by BHP Billiton (BHPB) could worsen the situation with two players controlling about 75% of the iron ore seaborne market (BHPB/Rio Tinto about 40%, Companhia Vale do Rio Doce about 33 %).
Although BHPB and Rio Tinto have a relatively small share of the EU market, Moffat assumes that “if the three price setters would be reduced to only two this could lead to even higher prices for raw materials and to a lower incentive for mine expansion.”
The steel industry is confronted with a similar situation in coking coal. Rio Tinto and BMA, a joint venture of BHPB and Mitsubishi, control almost 50% of the hard coking coal seaborne market.

Represented by EUROFER, the European steel industry is the world leader in its sector with a turnover of EUR 140 billion and direct employment of 370 thousand people, producing 200 million tons of steel per year.

Contact
Gordon Moffat, Director General +32 2 738 79 26 (g.moffat@eurofer.be)
Axel Eggert, Director Public Affairs +32 2 738 79 34 (a.eggert@eurofer.be)