China urged to set up iron ore reserve -industry exec

SHANGHAI, Nov 26 (Reuters) - China's steel industry, the world's largest, is lobbying the country's central government to establish a national iron ore reserve to secure supplies of the raw material, a senior industry official said on Monday.

"We have suggested the government sets up the reserve," Luo Bingsheng, vice president of the China Iron and Steel Association, told reporters on the sidelines of an industry conference held in Beijing. He did not elaborate.

Luo also said China would boost investments in overseas mining projects to break through a monopoly of foreign companies in the sector.

On BHP Billiton's (BHP.AX: Quote, Profile, Research, Stock Buzz) proposed takeover of rival Rio Tinto Ltd/Plc (RIO.L: Quote, Profile, Research, Stock Buzz), he said BHP had told Chinese steelmakers that its case for a takeover would not be connected to upcoming iron ore talks.

"BHP promised that the proposed merger would not be connected to iron ore price negotiations and the talks for next year's contract would abide by the previous rules," he said.

Luo was speaking after BHP Chief Executive Marius Kloppers made the rounds in Beijing last week to try to allay Chinese concerns over the proposed $120 billion-plus all-share takeover.

Kloppers met officials from the China Iron and Steel Association, led by Luo, on Thursday.

China's steel industry, the world's biggest, has voiced worries that a combination of BHP and Rio could drive up the price of iron ore.

The two mining giants together account for just under two-fifths of China's imports of the commodity, the main feedstock for steel. (Reporting by Niu Shuping, writting by Alfred Cang; editing by Anne Marie Roantree)