The statement said both parties had recently been advised their proposal would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office.

"Extensive discussions with the European Commission indicated the companies would not be able to go ahead with the joint venture without large divestments, which would have destroyed the synergies and eroded long term growth options," the source close to the process said.
"With that in mind, both parties didn't think that was acceptable."

Production from the joint venture would have eclipsed top iron ore miner, Brazil's Vale. Steelmakers cheered the outcome on Monday.
"We were concerned about the monopoly of a proposed joint venture of Rio and BHP. We are relieved that the deal is not going to happen," said a spokesperson at South Korea's POSCO, the world's no.3 steelmaker.

Based on a UBS forecast for a 1 billion tonne seaborne iron ore market in 2010, Rio Tinto would make up 25 percent of the market, BHP would make up 15 percent and Vale about 30 percent.

Rio agreed to the joint venture in June 2009 at a time iron ore markets had slumped and it was desperate to pay down $40 billion in debt it had taken on with its ill-timed takeover of Alcan.

The company has since slashed its debt pile and iron ore markets have improved sharply, making the iron ore joint venture less appealing to its shareholders, who saw BHP as the big winner in the deal.

Eoin Treacy's view This joint venture has been in doubt for some time, so today's announcement has not had a great deal of impact on the respective shares; both of which continue to rally. The most likely beneficiaries remain steel companies which have been suffering tighter margins as a result of higher iron-ore prices and the slowdown in demand from the USA and Europe.

BHP Billiton continues to rally towards the April highs near 2350p and a sustained move below the 200-day MA, currently near 2000p, would be required to question the consistency of the medium-term uptrend.

Rio Tinto has rallied impressively since early September and posted a new recovery high last week. While increasingly overextended relative to the 200-day MA, a break of the short-term progression of higher reaction lows, currently in the region of 3800p would be required to question short-term scope for some additional upside.