Miners pull iron ore joint venture

The pair pulled the joint venture after being told that the proposal would not be approved in its current form by the European Commission, as well as by regulators in Australia, Japan, Korea and Germany.

"Some regulators have indicated they would require substantial remedies that would be unacceptable to both parties, including divestments, whereas others have indicated they would be likely to prohibit the transaction outright," Rio Tinto said in a statement.

The cancellation came as little surprise to markets because problems with some regulators were already well known. Shares in both companies were more than 1 per cent lower in London today during a downbeat session for the whole mining sector.

BHP and Rio Tinto - among the world's three largest iron ore miners - had hoped to save at least $10bn by combining their operations in the Pilbara, a remote region rich in iron ore and other minerals.

BHP's chief executive Marius Kloppers said: "The large synergies from combining our West Australian iron ore assets with Rio Tinto's have caused us to persevere in seeking to obtain regulatory approvals.

"However, it has become clear that this transaction is unlikely to obtain the necessary approvals to allow the deal to close and as a result both parties have reluctantly agreed to terminate the agreement."

It is the second time that BHP has been frustrated in its attempt to land Rio's iron ore operations after a takeover offer worth 75 billion was rejected in February 2008.

BHP is currently involved in a hostile bid for the world's biggest fertiliser maker, Potash Corp.

London-based BHP, which employs 41,000 people and has operations in 25 countries, is betting that demand for agricultural fertiliser ingredients will rise as the developing world requires more meat and plants.