European steelmakers called Friday for EU regulators to block BHP Billiton Ltd's takeover of mining rival Rio Tinto PLC, saying the deal would allow a new iron giant to fix prices for steel's key raw material. Eurofer, the European Confederation of Iron and Steel Industries, said it “cannot believe that the (European) Commission will authorize the merger of two of three mining companies which dominate almost 75 percent of the world market for seaborne iron ore.” The group's director general, Gordon Moffat, said the deal would give the new company the power to fix prices for iron ore and coking coal on top of surging increases in recent years. The steel industry has seen costs soar in recent months. Companhia Vale do Rio Doce, the world's largest iron ore miner, struck a deal with six Asian steel makers in February to raise iron ore prices by 65 percent. The coking coal that heats furnaces has gone up 200 percent. ArcelorMittal SA, the world's largest steelmaker and Eurofer member, has blamed these huge price hikes for its own price increases which force customers pay more for the steel that constructs buildings and is formed into cars and machinery. A BHP Billiton takeover of Rio Tinto would combine the No.2 and No. 3 iron miners and allow them to overtake Vale with a market share of almost 40 percent of seaborne iron ore. But it is far from a done deal. Rio Tinto has so far held off from talks, saying BHP Billiton's offer undervalues the company. BHP Billiton in February made a hostile, all-equity bid, then valued at $147.4 billion, for Rio Tinto. At 3.4 of BHP shares for every Rio Tinto share, the value of the deal fluctuates with share prices.
