WRAPUP 2-China, Europe steelmakers join anti-Rio/BHP chorus

* China, Europe, Japan steelmakers to fight Rio-BHP venture

* China calls for open international iron ore market

* JV structure may sidestep competition concerns - analyst

(Adds Chinese, European steel groups)

By Yuko Inoue and Ben Blanchard

TOKYO/BEIJING, June 9 (Reuters) - Japanese, Chinese and European steelmakers joined forces to fight a plan by Rio Tinto (RIO.L) and BHP Billiton (BLT.L) to link up iron ore operations, while China called for "a fully open international market".

Steelmakers believe a tie-up between the second- and third-largest producers of the raw material to make steel would further concentrate the industry, which saw prices quadruple from 2004 to 2008.

"A merger of iron ore assets of this type in a world market already dominated by just three suppliers would not be in the interests of the steel industry, European consumers or the European economy," industry body Eurofer said on Tuesday. [ID:nL9580070

Debt-ridden Rio (RIO.AX) ripped up its $19.5 billion deal with China state-owned metals conglomerate Chinalco last week, opting instead to combine its western Australian iron ore operations with those of BHP (BHP.AX) in a 50:50 joint venture.

The two mining heavyweights, which with Brazil's Vale (VALE.N) (VALE5.SA) account for nearly 70 percent of the world's traded iron ore, face tough anti-trust scrutiny, but analysts say the planned venture's shrewd structure could mean they sidestep some concerns. [ID:nL51037062]

Rio and BHP are betting that keeping their iron ore marketing operations separate will ease anti-trust concerns.

"What was very smart of Rio and BHP is that they've done it as a joint venture to use their infrastructure and that only marginally increases the tonnes for BHP," said James Wilson, a mining analyst for DJ Carmichael & Co in Perth.

"BHP goes from 150 to 170 million tonnes and Rio actually reduces from about 200 million to 170 million tonnes. Is this really anti-competition? I don't think so, and doubt the European Commission will think so," he said.

The Japan Iron and Steel Federation said it would also fight the venture, echoing a statement by the World Steel Association.

"While it takes the form of a joint production venture, it is in effect an anti-competitive move similar to that of the failed takeover bid by BHP of Rio Tinto," said the Japanese steel body, which includes world No. 2 steelmaker Nippon Steel Corp (5401.T).

"A joint venture agreement like this has a strong momopolistic tint," the China Iron and Steel Association said. [ID:nSHA122808]

FULLY OPEN MARKET?

China Foreign Ministry spokesman Qin Gang declined to comment on the Rio-BHP link at a regular news briefing, but told reporters: "We hope prices for international mining resources can remain stable. And the international market should be fully open."

China's huge steel sector, the world's biggest consumer of iron ore, is deep in talks with Rio and BHP about iron ore prices for this year.

A new settlement regime for prices may emerge as China persists in holding out for price cuts of 40-50 percent, bigger than those settled with other Asian steelmakers. [ID:nSP353301]

South Korea's POSCO (005490.KS), the world's No.4 steelmaker, said on Tuesday it was seeking a deal with BHP Billiton to cut iron ore prices by a third for 2009-2010 supply contracts, matching a deal with Rio. [ID:nSEO128407]

The dropping of Chinalco's planned investment in Rio, which would have doubled its holding in Rio to about 18 percent, has sent shockwaves through China. The deal had been hailed as a breakthrough for the nation, which has consistently punched far below its weight in overseas acquisitions.

"Its purpose was mutually beneficial and now the unilateral move by Rio Tinto not only disappointed the Chinese company but also caused great reverberations around Chinese industry," Qin said.

A Rio-BHP iron ore venture could benefit Brazil's Vale by reducing the number of companies participating in price talks with steel mills. [ID:nN08316923] (Additional reporting by Jim Regan in SYDNEY and Miyoung Kim in SEOUL; Writing by Mayumi Negishi, Edwina Gibbs and Eric Onstad; Editing by Ian Geoghegan and David Cowell)