An official with the Ministry of Industry and Information Technology (MIIT) said Tuesday that the proposed alliance of Rio Tinto and BHP Billiton had a "strong monopolistic color" and Chinese firms would watch it closely and find ways to cope with it.

Last year, China imported 440 million tonnes of iron ore, half of the world's total, so any slight market changes would affect Chinese steel makers. China's anti-monopoly law should apply in the proposed deal, said Chen Yanhai, head of the raw material department of MIIT at an industry meeting held in the northeastern city of Anshan, Liaoning Province.

If the tie-up proved to be monopolistic, "we have to seek new policies and regulations to allow Chinese companies have a bigger say in iron ore pricing," said Chen without elaborating.

Rio Tinto scrapped a proposed 19.5-billion-U.S.-dollar investment by Aluminum Corp. of China, or Chinalco, on June 5, and turned to rival BHP Billiton, which would pay Rio Tinto 5.8 billion U.S. dollars to set up a joint venture to run the iron ore resources of both companies in west Australia.

On Monday, spokesman of the Ministry of Commerce Yao Jian said if the revenue of the joint venture reached "a certain amount," China's anti-monopoly law would apply.

That law requires a company to get government approval before consolidation if its global revenue exceeds 10 billion yuan (1.47 billion U.S. dollars) and its revenue in China exceeds 2 billion yuan.

An anti-monopoly review is also necessary if two or more parties in the company had more than 400 million yuan of revenue in China in the previous fiscal year.

In the year ended 30 June, BHP Billiton's revenue in China was 11.7 billion U.S. dollars, while that for Rio Tinto was 10.8 billion U.S. dollars, according to the companies' websites.

It was unclear what actions China would take if the case was determined to be covered by the Chinese anti-monopoly law.

At the meeting Tuesday, Chen also said domestic steel makers should beef up technology and innovation to cut energy consumption and raise efficiency. Also, he said, China "should increase exploration of domestic mines to reduce reliance on imports."

(Xinhua News Agency June 17, 2009)