10th November 2007, 12:00 WST
Former resources development minister Colin Barnett has claimed the WA Government has the power to effectively undermine the proposed $400 billion merger between global mining giants BHP Billiton and Rio Tinto and should move to do so in the interests of the State.
Rio shares soared by as much as $24.70 to a record high of $138.10 yesterday after BHP, the world’s biggest miner, confirmed in London it had recently made a takeover offer for its Pilbara rival and remained interested even though the offer had been rejected by the Rio board.
The sharemarket action spilt over to other WA iron ore companies, including Andrew Forrest’s Fortescue Metals Group, which traded as much as $7.59 higher at $52.10.
Mr Barnett said any move by BHP and Rio to merge their Pilbara iron ore operations would require the approval of State Parliament because it would involve reassigning ownership of resources covered by State Agreements. He said the Government should not grant those approvals because reducing competition in the Pilbara iron ore industry was not in the State’s best interests.
Mr Barnett said while the Government had no power to block a merger between BHP and Rio at a corporate level, it could effectively undermine the synergies and cost savings which made the merger appealing by preventing the two companies from combining their all-important Pilbara iron ore operations.
“So the WA Government and Parliament are pivotal to all of this and they’re not aware of that in London,” Mr Barnett said.
Mr Barnett took a similar stance in 1999 when BHP and Rio discussed merging their Pilbara businesses in discussions which ultimately came to nothing.
However, Alan Carpenter appeared to refute Mr Barnett’s understanding of the Government’s role yesterday.
A spokesman for the Premier said advice provided by the Department of Industry and Resources suggested that the obligations and rights encapsulated in the State Agreements passed automatically to the new owners.
“Therefore the Government would not anticipate any major rewrites of State Agreements,” the spokesman said.
Earlier, Mr Carpenter said in a statement that the takeover discussions were clearly a matter of great interest to the State.
“Competition has been an important factor in the development of WA’s resources,” Mr Carpenter said. “The State Government has a healthy relationship with both companies but, at this preliminary stage, this is a matter for the companies and their respective shareholders.”
The Australian Competition and Consumer Commission vowed yesterday to carry out a “close and comprehensive” investigation of any merger proposal, though a spokeswoman said it was too early to comment on specific issues relating to a tieup between BHP and Rio Tinto until a deal had actually been agreed.
BHP and Rio would not comment yesterday on whether they believed WA Government approval was needed for a merger of their Pilbara operations.(thewest)
Former resources development minister Colin Barnett has claimed the WA Government has the power to effectively undermine the proposed $400 billion merger between global mining giants BHP Billiton and Rio Tinto and should move to do so in the interests of the State.
Rio shares soared by as much as $24.70 to a record high of $138.10 yesterday after BHP, the world’s biggest miner, confirmed in London it had recently made a takeover offer for its Pilbara rival and remained interested even though the offer had been rejected by the Rio board.
The sharemarket action spilt over to other WA iron ore companies, including Andrew Forrest’s Fortescue Metals Group, which traded as much as $7.59 higher at $52.10.
Mr Barnett said any move by BHP and Rio to merge their Pilbara iron ore operations would require the approval of State Parliament because it would involve reassigning ownership of resources covered by State Agreements. He said the Government should not grant those approvals because reducing competition in the Pilbara iron ore industry was not in the State’s best interests.
Mr Barnett said while the Government had no power to block a merger between BHP and Rio at a corporate level, it could effectively undermine the synergies and cost savings which made the merger appealing by preventing the two companies from combining their all-important Pilbara iron ore operations.
“So the WA Government and Parliament are pivotal to all of this and they’re not aware of that in London,” Mr Barnett said.
Mr Barnett took a similar stance in 1999 when BHP and Rio discussed merging their Pilbara businesses in discussions which ultimately came to nothing.
However, Alan Carpenter appeared to refute Mr Barnett’s understanding of the Government’s role yesterday.
A spokesman for the Premier said advice provided by the Department of Industry and Resources suggested that the obligations and rights encapsulated in the State Agreements passed automatically to the new owners.
“Therefore the Government would not anticipate any major rewrites of State Agreements,” the spokesman said.
Earlier, Mr Carpenter said in a statement that the takeover discussions were clearly a matter of great interest to the State.
“Competition has been an important factor in the development of WA’s resources,” Mr Carpenter said. “The State Government has a healthy relationship with both companies but, at this preliminary stage, this is a matter for the companies and their respective shareholders.”
The Australian Competition and Consumer Commission vowed yesterday to carry out a “close and comprehensive” investigation of any merger proposal, though a spokeswoman said it was too early to comment on specific issues relating to a tieup between BHP and Rio Tinto until a deal had actually been agreed.
BHP and Rio would not comment yesterday on whether they believed WA Government approval was needed for a merger of their Pilbara operations.(thewest)
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