BHP Gets Approval for Rio Takeover From South Africa

Oct. 23 (Bloomberg) -- South African regulators approved BHP Billiton Ltd.'s $69 billion hostile bid for Rio Tinto Group as long as it sells the interest in the Coega Aluminium Smelter Project the company would acquire as part of the takeover. The approval requires BHP, the world's largest mining company, to sell Coega within 12 months of a Rio takeover, the Competition Commission said in an e-mailed statement today. Steelmakers oppose the deal, saying it would give BHP too much influence over iron-ore prices. The merged company would vie with Brazil's Cia. Vale do Rio Doce as the largest supplier of the raw material used to make steel. Rio, the second-largest iron-ore exporter, fell in London today as European regulators told lawyers for BHP that the merger may break antitrust rules. ``The merger would result in the prevention of competition in the primary aluminium market in South Africa,'' the regulator said. The European Commission, the 27-nation European Union's antitrust regulator in Brussels, will likely issue the companies a so-called statement of objections, two people close to the case said. The objections will outline the commission's concerns that the combined company's share of the iron-ore market may lead to price increases, said the people, who declined to be identified because the regulator's proceedings aren't public. Deadline The decision may pressure BHP to sell assets and prove to regulators by Jan. 15 that the world's biggest mining merger won't restrain competition. ``We note the commission's recommendations and we await the outcome of the full process and the decision of the tribunal,'' BHP spokeswoman Samantha Evans said by telephone from London. BHP's regulatory process was ongoing and ``clearly there are other jurisdictions where approvals need to be obtained,'' Rio spokesman Robin Walker said today in an e-mail. The Coega smelter is on hold until at least 2015 because of political uncertainty and a lack of new energy supply in the country, Dick Evans, chief executive officer of Rio's Alcan unit, said last week. Rio, which inherited the project when it acquired Canada's Alcan Inc. last year, said in May the plant may produce 720,000 metric tons of aluminum a year when complete. Rio Tinto fell 149 pence, or 6.2 percent, to 2,240 pence at the close on the London Stock Exchange, valuing the company at 34.9 billion pounds ($56.2 billion). BHP slipped 6.5 percent to 823 pence. Source: Bloomberg