Europe’s steelmakers have asked the European Commission’s anti-trust inspectors to block the proposed iron ore joint venture between Rio Tinto and BHP Billiton.

Eurofer, which represents the EU’s biggest steel companies, including ArcelorMittal, ThyssenKrupp and Corus, says that the joint venture will restrict competition because the two companies will be able to pool knowledge about volumes and demand for iron ore.

Rio and BHP rank second and third, respectively, in world iron ore production after the Brazilian leader, Vale. Together, the three companies account for about two thirds of world trade in iron ore. Eurofer vigorously opposed an attempt last year by BHP to forge a merger with Rio, a deal that also roused the ire of Asian steelmakers, notably Chinese, Korean and Japanese producers.

The steel lobby expressed scorn over arguments by the would-be iron ore partners that they would operate separate marketing businesses and co-operate only on mining operations.

Gordon Moffatt, director-general of Eurofer, said: “The idea that they can keep separate commercial entities is a fantasy.”

Eurofer has already submitted arguments to the Commission against the Rio/BHP deal and has also had discussions with China’s steelmakers through their representative body, CISA, as well as with the Chinese competition authority.

Mr Moffatt said that the joint venture would have the same impact as the previous full merger proposal. It would enable the two companies to develop a joint view about demand and supply. Eurofer said: “They will have identical output and full knowledge of each other’s volume.”

Mr Moffatt said that separate marketing organisations were irrelevant. “Nobody markets iron ore," he said. "The main activity is the annual round of benchmark pricing.”

The most recent pricing round ended in drama for Rio when the Chinese authorities arrested five Rio officials and accused them of industrial espionage. The Chinese investigation into the alleged spying was recently extended by a further two months.

Rio and BHP hope to gain savings and merger benefits worth $10 billion from combining their vast iron ore mines in Australia’s Pilbara region.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive