The Australian Competition and Consumer Commission will not oppose the acquisition by Billiton of up to 86 per cent of the Worsley JV, ACCC Chairman, Professor Allan Fels, said today.
The ACCC has conducted extensive market inquiries into the aluminium industry over the course of the past 12 months through its examination of both the merger of Alcoa and Reynolds Metals and the merger of Alcan and Alusuisse.
Alcoa and Billiton are the first and fourth largest producers of alumina and aluminium in the world. Under agreement with the European and American competition authorities, Alcoa is required to divest of itself of its interest in Worsley in order to allay competition concerns arising from its acquisition of Reynolds Metals earlier this year.
Worsley's assets consist of bauxite mining and alumina refining operations situated in the Darling Ranges in Western Australia. In 2001 Worsley is expected to produce 3.1 million tonnes of alumina, all of which is to be exported for use in overseas aluminium smelters. The present stakeholders in Worsley are Alcoa/Reynolds with 56 per cent, Billiton with 30 per cent and a Japanese consortium with 14 per cent.
The majority of producers of alumina are vertically integrated through bauxite mining to aluminium smelting. Over two-thirds of alumina produced is consumed by integrated aluminium producers. The remaining production is sold either at a "spot price" or via long term contracts to traders, non-integrated smelter operators or integrated smelter operators who are deficient in alumina. This non-integrated market for alumina is often referred to as the market for "untied" alumina.
In reaching its decision the ACCC notes that Billiton is expected to control less than 10 per cent of the worldwide trade in untied alumina post acquisition. Further the acquisition is not expected to result in the concentration of the Australian alumina market.
In these circumstances the ACCC considers that the acquisition is unlikely to result in a substantial lessening of competition.