BHP Billiton and Rio Tinto

The Japan Iron and Steel Federation on Tuesday vowed to fight against BHP Billiton and Rio Tinto linking up their iron ore operations, saying the move could restrict competition.

''While it takes the form of a joint production venture, it is in effect an anti-competitive move similar to that of the failed takeover bid by BHP of Rio Tinto,'' the Japanese steel body said in a statement.

''We understand the judgement of Japan's competition authorities will also be vitally important in this matter.'' Debt-ridden Rio on June 5 dumped a $19.5 billion investment deal from Chinese metal group Chinalco, and instead said it and BHP would combine their western Australian iron ore operations into a 50-50 joint venture. BHP will pay Rio $5.78 billion upon completion.

The plan to forge a joint venture by the world's second- and third- largest iron ore miners has drawn sharp criticism from global steelmakers.

The World Steel Association said on June 5 that it opposed the venture and called on competition authorities to examine the deal seriously. China's leading steel industry group strongly opposes a joint venture deal, China's influential Caijing Magazine reported on Monday.

The two mining heavyweights face tough anti-trust scrutiny on the plan, but a shrewd structure to the joint venture could sidestep some concerns, analysts said ''What was very smart of Rio and BHP is that they've done it as a joint venture to use their infrastructure and that only marginally increases the tonnes for BHP,'' said James Wilson, a mining analyst for DJ Carmichael & Co in Perth.

''BHP goes from 150 to 170 million tonnes and Rio actually reduces down from about 200 million to 170 million tonnes. Is this really anti-competition, I don't think so, and doubt the European Commission will think so,'' he said.

BHP and Rio together with the world's No.1 Vale account for nearly 70 percent of traded iron ore. BHP and Rio also account for nearly 80 percent of output from Australia's key Pilbara region.