The Australian Competition and Consumer Commission does not intend to intervene in the proposed merger of BHP and Billiton, ACCC Chairman, Professor Allan Fels, announced today.
BHP and Billiton plan to combine their businesses and to align the economic interests of their shareholders, by means of a dual listed company structure. This involves the two companies continuing as separate legal entities but operating as if they were a single economic unit.
"In Australia BHP is engaged in the production of metallurgical coal and thermal coal, steel, oil and natural gas, iron ore, silver, lead and zinc while Billiton is involved the production of alumina, manganese, nickel, cobalt and thermal coal.
"While the companies have extensive mining operations in Australia and overseas, there is only a minor overlap between the parties in Australia in the production and sale of thermal coal.
"Thermal coal is used mainly for the production of electricity and metallurgical coal is used in blast furnaces to produce iron and steel and as a reductant in the refining of other metals such as aluminium. Australia exports over 50 per cent of its thermal coal and 90 per cent of its metallurgical coal.
"The merger does not result in any increase in concentration in the market for the production of metallurgical coal. In regard to thermal coal the merged entity will account for less than 10 per cent of production. There are alternative domestic suppliers of thermal coal including Rio Tinto, Mitsubishi, MIM and Wesfarmers.
"The ACCC concluded that the proposed merger is not likely to result in a substantial lessening of competition in any market".