by Kris Sayce on November 26, 2008
What is the big news this morning? We’ll need to think about that one for a while.
In the meantime there is the small matter of BHP Billiton [ASX: BHP] pulling out of the takeover of Rio Tinto [ASX: RIO].
Let’s be honest, it isn’t a major surprise. For some time the market has doubted that the deal would go through. Based on yesterday’s BHP share price Rio should have been trading closer to $90 a share rather than the $63.90 that it closed at.
Chairman Don Argus summed up the reasons for the decision:
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by Allan Robinson on October 2, 2008
There’s an obvious problem with that, though. Top line players in Australia don’t actually have any advantage. Vale’s asking for more. But Rio and BHP have already asked for more and gotten it.
The three big guns hunt in packs. Contract negotiations fall into place pretty quickly once one big gun gets a price. We read somewhere about the possibility of an ‘iron OPEC’ earlier in the year. To be honest, the world already has one. It’s just not official yet.
To add to that, the ACCC gave approval to BHP on the merger yesterday.
That would not make the situation better for China. We don’t care what analysts said about competition. It will make iron.
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