Chinese opposition mounts to BHP-Rio

The proposed $170bn merger between miners BHP Billiton and Rio Tinto would be "terrible" for global competition and should be rejected by antitrust regulators, according to Zhang Xiaogang, China's most powerful steel industry executive.

The comments by Mr Zhang, chairman of the China Iron and Steel Association and of Ansteel, one of the country's biggest steelmakers, are among the harshest criticisms of the proposed deal.

The prospect of a merger between two of the world's biggest suppliers of iron ore has been resisted by many steel companies..

Last week, the Australian antitrust regulator approved the merger of the two Anglo-American rivals, leaving the European Union's competition authority as the final regulator to decide on the deal. It has until January to do so.

Chinese steel companies - which together make up the world's largest bloc of steel producers, accounting for more than a third of global output - have been particularly opposed to the merger.

China lacks its own supply of good-quality ore and so its steelmakers rely heavily on BHP, Rio and Vale of Brazil, the third big iron ore miner.

Iron ore prices have risen steeply in recent years, adding to the cost pressures for the steel industry.

Further price rises are expected next year in spite of the commodities slowdown.

Mr Zhang said Chinese steel production and consumption was slowing at a faster rate than many forecasters had expected, in a development that could add to worries about a prolonged spate of fragility for the global steel sector.

He said China's steel production and consumption - which last year reached more than 400m tonnes for both quantities - would this year be "about the same".

At the start of this year, many steel experts forecast the country's production and consumption to expand by more than 10 per cent compared to 2007.

Mr Zhang said he thought the Chinese steel industry would return to a higher level of

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