The Japan Today reported that Japanese steelmakers welcomed the failure by two major British Australian mining companies Rio Tinto and BHP Billiton to establish an iron ore production joint venture in Australia.

The Japan Iron & Steel Federation said that "The Japanese steel industry welcomes the retraction of the project to establish a JV." It added that the industry has consistently objected to the plan on the grounds that it would be anticompetitive.

A Japanese steelmaker source noted that the development would not change the effective oligopolistic control of the global iron ore market exerted by the two major mining companies and Brazil's Vale, the world's largest iron ore producer.

To counter the upsurge in prices, Japanese steelmakers have joined hands with trading houses to expand their equity stakes in mineral producers other than the three major mining companies. Steelmakers have also collaborated across countries to have stronger bargaining power over prices by cooperating with each other in iron ore procurement.

A source at Nippon Steel Corporation said that "We have no choice but to continue to secure our concessions through investment in mineral producers."

It may be recalled that Rio and BHP announced a plan in June 2009 to create a 50:50 JV to produce iron ore in Western Australia. But the plan drew opposition from steelmakers because they were worried that the deal might result in hikes in iron ore prices.

(Sourced from www.japantoday.com)