THE STEELMAKER Corus has stepped up its campaign against BHP Billiton’s attempt to take over mining rival Rio Tinto by complaining to the European Union about the deal.

Philippe Varin, who still runs Corus after its takeover last year by Tata Steel of India, is concerned the £100 billion tie-up would raise competition issues.

Several regulators around the world are examining BHP’s plan for a hostile takeover of Rio Tinto, launched last November.

“We were recently questioned by the EU about BHP/Rio,” Varin said. “We gave our very, very strong negative sentiments on further concentration in the iron-ore industry.”

Steelmakers have been hit by steep price rises. The price of iron ore has soared in the past five years, driven by the construction boom in China. Rio Tinto last week sealed an agreement to nearly double the price of its iron-ore shipments to China’s biggest steelmaker, Baosteel.

BHP and Rio Tinto have called for the traditional annual round of price talks to be replaced by an index pricing system that would give them much greater flexibility.

If they combined, the pair would control about 36% of the world’s seaborne trade in iron ore, which sets the price used in annual contract talks. Together with Brazilian miner Vale, the world leader, the tie-up would in effect create a duopoly.

Varin added: “If you link this with a spot-price approach, what does a spot price mean when there is a very concentrated base of producers and when two producers of iron ore would have 70% of the market? Would it really be a spot price dictated by the market? I don’t think so.”

Baosteel’s willingness to pay Rio Tinto as much as 96.5% more for iron ore than its old contract is the largest price rise in more than a decade, suggesting the commodities boom is still accelerating.

Chinese mills had been expecting a price rise of at least 65%, in line with the increase negotiated between Vale and Asian steel producers in February.

BHP is still in talks with its customers and has hinted that it might angle for even more.

Marius Kloppers, BHP’s chief executive, said last week that the premium paid to Rio Tinto over and above the Vale settlement was “a step in the right direction”.

BHP argues that the combination with Rio Tinto would not cause economic harm. On the contrary, it would help customers by boosting supply, it claims.

The company measures market share differently, arguing that it has only 25% of the wider iron-ore market that includes domestic iron consumption.

Still, regulators are expected to demand sell-offs, especially on operations at Pilbara in western Australia, the world’s biggest source of iron ore. Anglo American, run by Cynthia Carroll, is best placed to acquire any assets that must be sold. She is looking to build up Anglo’s iron-ore arm.

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