Mining Mergers May Take Page From Big Oil

Proposed consolidation could drive commodity prices even higher
By Kevin Spak,  Newser Staff
Posted Dec 18, 2007 3:08 PM CST
Alcan President and CEO Dick Evans, left, and Rio Tinto CEO Tom Albanese address a news conference in Montreal, Thursday, July 12, 2007. Mining giant Rio Tinto has offered to buy Canadian aluminum company...   (Associated Press)
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(Newser) – When Anglo-Australian mining giant BHP Billiton announced its bid to merge with archrival Rio Tinto, the Wall Street Journal got déjà vu. The deal, which would combine the world’s largest and third-largest miners, looks a lot like the late-'90s megamergers that produced today’s Big Oil titans. “Really the same game is playing out,” says one emerging-market expert.

When companies like Exxon and Mobil came together, they were bidding for survival in a depressed market. Commodity prices are already through the roof, but consolidation could drive them up further, upping the cost of consumer goods worldwide. "People with monopoly power don't use it to decrease prices and develop more supply," says one industry watcher.