BHP, Rio to work with EU probe

(SYDNEY) - Mining giants BHP Billiton and Rio Tinto said Tuesday they will cooperate with European regulators probing their proposed iron ore joint venture, which has also raised concerns in China.

The European Commission said Monday it would investigate the Anglo-Australian companies' plans to jointly produce iron ore at their West Australian Pilbara operations.

"We will work with the European Commission and aim to convince them of the benefits of the joint venture structure and why it will not raise competition concerns," a BHP Billiton spokeswoman told AFP.

"This is a production joint venture only. It will enable BHP Billiton and Rio Tinto to deliver more ore to the market faster and at lower cost by unlocking the synergies between the two businesses in the Pilbara."

Rio Tinto noted that the companies remained competitors.

"The sales and marketing processes will remain as they are today, with both companies maintaining independent strategies and continuing to compete," a spokesman told AFP.

"Importantly the market as a whole will continue to determine prices. As is the case now, we will continue to compete with each other in terms of marketing and pricing."

The European Commission said it had opened a formal antitrust investigation into the proposal to combine BHP and Rio's western Australian operations to produce iron ore -- a key ingredient in steel production.

The companies account for more than one third of total global supply of the commodity and Brussels competition watchdogs fear their joint venture threatens to skew the market.

The joint venture scheme updates an original hostile takeover bid for Rio by BHP which was dropped in November 2008 amid the global economic turmoil.