Rio Tinto and BHP Billiton have not received any indications that the two mining giants will face regulatory issues in forming an iron ore production joint venture, the head of Rio's iron ore division said on Monday.
The pair plan to form a production joint venture that will combine their iron ore operations in Western Australia in a bid to gain around $10 billion in synergies.
It is very early days .. we have not received any indications of any issues from the European Commission, said Sam Walsh.
He said Rio and BHP were on track to meet the December 5 deadline for reaching a binding agreement on the iron ore joint venture.
Both sides have got teams that are working to that timeframe. I reviewed late last week the progress and I've got to say it's very encouraging, Walsh said.
The agreement is needed before the two groups can make a formal approach to regulatory bodies such as the European Commission, to have the joint venture plan approved.
Walsh added that the outlook for iron ore prices in 2010 was very positive.
From our view of the market and from where we are sitting today we see a very tight market. The current spot prices indicates positive signs for prices next year.
When asked about comments from the China Iron and Steel Group last week that it expected to see a modest rise in iron ore prices in the next round of annual term talks, Walsh said at the least we can agree on the direction of prices this time.
Walsh stressed that the joint venture only involved production of iron ore, with each firm to market its own ore to customers in Asia such as Chinese, Japanese and South Korean steel mills.
It is now very clear that it is a production joint venture, he said.
The two iron ore miners in October scrapped a plan to co-market some iron ore from the proposed joint venture that had drawn criticism as being anti-competitive.
(Reporting by Fayen Wong, Writing by Bruce Hextall; Editing by Lincoln Feast)