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BHP-Posco venture a step closer
SYDNEY, Australia (CNN) -- Australia's competition regulator said Tuesday it plans to allow a joint mining venture between resources giant BHP Billiton and South Korean steelmaker Posco. The venture initially will add about $150 million a year to the value of Australia's iron ore production, rising later to $450 million a year. Australian Competition and Consumer Commission Chairman Allan Fels said Tuesday there were likely to be "significant public benefits" from the venture, which will develop an iron ore mine in the Pilbara region of Western Australia. These benefits will likely outweigh any anti-competitive effect, Fels said. Posco, which buys iron ore and coking coal from BHP Billiton, is the Australian company's single biggest customer. Still at draft stageThe deal, which would see full-scale mining starting in September this year, is not yet certain. The competition commission's determination is still a draft at this stage, and it has invited interested parties to make further submissions before it issues a final ruling. BHP Billiton and Posco plan to develop the site primarily for the export market. It will mine Marra Mamba iron ore, a relatively new type on the world market. Assuming the venture goes ahead, it will initially produce 5 million tons of ore a year, rising eventually to 15 million tons a year by 2011. Shares close lowerShares in BHP Billiton closed 3.62 percent lower Tuesday at A$9.04, down 34 cents. That compared with a fall of just over 2 percent for the broader market, as measured by the S&P/ASX200. BHP and other mining shares fell on investor concerns about the growing likelihood of a U.S.-led war on Iraq. When BHP Billiton announced the venture with Posco in September 2001, it said the Pilbara site known as Mining Area 'C' contained the largest undeveloped Marra Mamba resource in the region, with an estimated size of 890 million tons. Besides Posco, BHP Billiton's overseas customers for iron ore include Japanese and Chinese steel mills. Australia's is the world's No. 2 producer of iron ore, behind Brazil, and the largest exporter.
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