The proposed iron ore joint venture between BHP Billiton and Rio Tinto has been described as a ‘monopoly’ by steel trade groups.

The China Iron and Steel Association said the proposal was ‘a threat to global steel market development’, and called for countries to use anti-monopoly measures to block the venture.

The Anglo-Australian miners have signed a binding agreement to combine their Western Australian ore operations. They will build a $116bn iron ore production site in Pilbara, Western Australia.

The miners will have an equal partnership in the joint venture, which has been a decade in the making and is expected to deliver production and development synergies of at least $10bn on a net present value basis.

Synergies will flow from combining adjacent mines into single operations, cutting costs, consolidating expansion projects and merging overhead and management activities into a single entity, the companies said. The site is expected to be open by late 2010.

The World Steel Association (worldsteel) and Eurofer both criticised the proposal. Worldsteel director Ian Christmas said: “The proposed JV would simply turn an oligopoly of three players into a duopoly.”

Eurofer director Gordon Moffat said: “It will unavoidably lead to market concentration and an increase in pricing power of the combined company which is unacceptable in competition terms.”