BHP Billiton (BHP), which is featured in both our Growth and Income Portfolios, failed to consummate a marriage with Rio Tinto (RTP) last year. But a subsequently proposed joint venture between the pair, the second- and third-largest iron ore producers in the world, could be nearing reality. The partnership between the two companies, if the deal is finalized, would merge their iron ore operations in Australia and create a synergy that could save around $10 billion a year on capital and production costs. The two companies are expected to ship more than 300 million tons combined of iron ore worldwide this year.

 

The joint venture is not written in stone yet. The companies are looking to finalize the deal by a December 5 deadline stated by Rio, while BHP’s CEO Marius Kloppers is less concerned about the date and is looking for completion before year-end. Regardless, the joint venture makes sense for both companies.