Japan steel association opposes BHP, Rio merger

TOKYO, Nov 19 (Reuters) A group of Japanese steelmakers said it was not in favour of a proposed merger of miners BHP Billiton Ltd and Rio Tinto as such a mega-merger would impede market price mechanisms.

Hajime Bada, chairman of the Japan Iron and Steel Federation and president of JFE Steel Corp -- the world's third-biggest steelmaker, said a merger of the two mining industry giants would control 40 percent of the world's iron ore seaborne trade and 60 percent of Japanese iron ore imports.

''We are worried that such a merger would impede a healthy market price mechanism. We are opposed to that,'' Bada told a news conference on Monday.

Bada added that he would express his opposition at a meeting with BHP Billiton's chief executive officer Marius Kloppers later in the day.

Earlier this month, BHP Billiton, the world's biggest mining group, made an unsolicited 0 billion bid for rival Rio Tinto.

Rio was quick to rebuff the offer as too low.

A marriage of BHP and Rio would create a global mega-force in mining of everything from iron ore and manganese to copper and diamonds.

Sources told Reuters earlier this month that Rio's board was open to a higher BHP approach, especially if it involved a cash component.

Kloppers, who is continent-hopping in coming weeks to press his case to big investors and customers, is believed to have met Nippon Steel Corp President Akio Mimura and the head of Mitsubishi Corp this morning.

REUTERS BJR VP1132