EU steel, car and engineering companies complain of harmful iron ore price hike

EU steel makers demand probe into high iron prices

BRUSSELS — European steel makers on Wednesday demanded an EU antitrust probe to check for monopoly abuse and cartel-type behavior by the three major iron ore suppliers Vale, BHP Billiton Ltd and Rio Tinto after price increases of more than 80 percent.

European car makers and engineering companies also complained that higher costs for iron ore, steel’s key ingredient, could do serious harm to their business and were not justified by higher demand from emerging economies China, India and Brazil and

Steel federation Eurofer, which represents ArcelorMittal SA, ThyssenKrupp AG and Corus Group PLC, said it has lodged a formal complaint with the European Commission after Vale and BHP Billiton struck deals with Asian steel mills that would increase iron ore prices by between 80 percent and 100 percent.

The group said it saw “strong indications of illicit coordination of prices increases and pricing models and pressure on individual steel producers to accept these changes” that it believed could breach EU competition law.

EU regulators can fine companies up to 10 percent of yearly global turnover if they find evidence that they are deliberately choking supply or hiking prices.

Neither BHP Billiton or Rio Tinto had any comment when contacted by the AP.

Brazil’s Vale referred reporters to an audio clip on their Web site where the company’s president Roger Agnelli said Eurofer “seems to have forgotten that the era of colonization is over.”

“The days when the production of developing or underdeveloped nations sustained or subsidized their well being no longer exists,” he said.

Brazil’s mining institute also claims that maintaining current iron ore prices — as Eurofer wants — would have a significant negative impact on the country’s balance of trade and was an unfair effort by European industry to impose their prices on raw material suppliers.

The European Commission has already acted on an earlier complaint from Eurofer about plans to combine the world’s No. 2 and No. 3 iron ore miners, Rio Tinto and BHP Billiton. They are examining how the deal will affect global prices or supply for iron ore transported by sea.

In a joint statement, Eurofer and engineering industry group Orgalime called on iron ore suppliers to keep to current contract conditions and offer fair price and fair access to raw materials that they say are crucial for manufacturing and the recovery of the global economy.

If European access to iron ore were to be jeopardized, they are warning of “severe consequences for the whole value chain” that could affect millions of jobs.

They also claimed the price rises are unjustified because they are “not based on any demand fundamentals” and iron suppliers already enjoy profit margins of up to 50 percent per metric ton of iron ore.

European car manufacturers represented by ACEA also complained of an “excessive and unpredictable pricing policy” by iron ore suppliers that could affect the competitiveness of European manufacturing by adding extra cost pressure.

They said car makers need one metric ton of steel per car and need “broad access to raw materials at competitive circumstances.”

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Associated Press writer Stan Lehman in Sao Paulo contributed to this story.