"You made the comment "The most likely beneficiaries remain steel companies which have been suffering tighter margins as a result of higher iron-ore prices and the slowdown in demand from the USA and Europe."

"I suspect the truth is the other way around - the steel companies will be losers from the production JV not proceeding. While demand for iron-ore is currently exceeding supply (hence the high current prices), new supply is on the way. That may take some time but as competition increases, the producers with the lower costs can afford to drop prices further than high cost competitors, using market share gains to offset at least some of the margin loss. And my understanding was that BHP and Rio would continue to separately sell their share of the production JV output anyway. The steel mills should be vitally interested in having lower cost producers rather than higher cost ones - in the end, the steel mills pay for those higher costs. Woolworths supermarkets in Australia have adopted a similar strategy successfully for many years - focus on driving down costs and share the proceeds between the customers and the shareholders. Its their competitors who suffer. I suspect the steel mills who complained to competition regulators have shot themselves in the foot!"

Eoin Treacy's view Thank you for this insightful email. Iron-ore remains an oligopoly with CVRD, Rio Tinto and BHP Billiton dominating the industry. Countries and steel companies have been investing in new mines in an attempt to diversify from Brazilian and Australian supply. This is a necessary, albeit expensive, endeavour because they lack a real bargaining chip when the three majors decide to raise prices. However, even with new mines coming on line in the next few years, they will still be at a disadvantage because the majors not only control supply but have a cheaper cost of production, allowing them greater leeway in combating any threat to their dominance.

The joint venture failed because European regulators in particular used their clout to oppose the move which they viewed as a step too far on the road to a monopoly. Since the joint venture was originally proposed on the basis of $10billion in synergies, the implication is that these costs will now still have to be borne by the respective producers, which is a negative for BHP Billiton and Rio Tinto.

Steel companies will welcome any moves that put a limit on the iron-ore cartel which is why I view them as the most likely beneficiaries of the failure of the joint venture. However this is not the only consideration for steel manufacturers.