As BHP Billiton has notified to the European Commission its intention to merge with competitor Rio Tinto, European steel industry has asked European Commission to stop merger.

Mr Gordan Moffat director general of EUROFER called upon the European Commission to dismiss the application for approval.

He said that “We can not believe that the Commission will authorize the merger of two of three mining companies which dominate almost 75% of the world market for seaborne iron ore. Such market dominance increases disproportionately the pricing power of companies concerned in iron ore and coking coal on top of the huge price increases seen over the last years. This is not in the interest of the European steel industry which has already had to pass on huge increases in raw material costs.”

Mr Moffat said that “Raw material supply is a key factor in the competitiveness of the European industry and has an enormous impact on the European economy as a whole in times where industry faces additional challenges in terms of credit availability and the rising Euro in the context of the global credit crunch and the slowing economy.”

Iron ore prices already increased massively this year by 65% and coking coal prices even by 200%, representing a huge rise in raw material costs for the steel industry. As Rio Tinto and BHP Billiton are the number two and three in the world’s iron ore business after Vale. The proposed merger would give the combined company a market share of almost 40 % of the seaborne iron ore market. Vale already has more than 33 %.