"The European Commission has opened a formal antitrust investigation ... under European Union rules on restrictive business practices," said a statement from Brussels on plans to jointly extract western Australian iron ore reserves.

Iron ore mining lies at the root of steel production and therefore the world's automotive and construction industries, and exports by the two companies already account for more than one third of total global supply.

Commission spokesman Jonathan Todd told reporters the EU investigation would proceed "as a matter of high priority."

The iron ore industry has been roiled in recent times by multi-billion-dollar and increasingly tough battles for control stretching from Beijing to Brazil, the home of the leading global producer, Vale.

Brussels competition watchdogs fear that the latest plans to carve up assets between the world's second and third-biggest iron ore producers threaten to skew the market even further.

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 -- after Brussels opened a probe into market-fixing suspicions then.

The two companies' iron ore agreement, signed last month, is expected to result in 10 billion dollars in savings.

The commission "will in particular examine the effects of the proposed joint venture on the worldwide market for iron ore transported by sea."

The EU said its decision to investigate "does not imply conclusive evidence of an infringement" to competition law, and stressed that there is "no binding deadline" for the probe's outcome.

The companies said at the time of signing the proposed tie-up that submissions had been made to both the Australian Competition and Consumer Commission and the European authorities regarding the deal.

China's steel industry, meanwhile, sent a delegation to Brazil in December -- according to one report, to discuss ways to lobby Brussels together with Vale -- as part of its opposition to the arrangement.

The world's biggest producer of steel, China imported around 50 percent of its iron ore needs -- or 443.45 million tonnes -- in 2008.

Beijing also said earlier this month that it had discovered five billion tonnes of its own iron ore deposits last year, in what was interpreted as a shot across the bows of Vale, Rio and BHP.

The three firms have collectively sidelined Beijing from annual talks to set a benchmark contract price, awaiting the conclusion of negotiations with Japanese buyers first.

BHP Billiton last week posted record iron ore production for the second half of 2009, amid rising commodity prices driven largely by Chinese demand.

Also this month, Rio Tinto beat annual forecasts with a record-breaking fourth-quarter of iron ore production.

A 19.5-billion-dollar (13.7 billion euros) bid for Rio by Chinese state-owned firm Chinalco collapsed in 2008 during similarly acrimonious negotiations.

Amid the fallout from that push, an executive of Rio Tinto, Australian passport-holder Stern Hu, was arrested in July 2009 in China alongside three Chinese colleagues.

Initially accused of stealing Chinese state secrets, a charge that soured diplomatic relations with Australia, the allegations were subsequently switched to bribery.

Chinese prosecutors will decide shortly whether to bring that case to trial.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News