According to some analysts, Chinese steel makers may benefit from the potential combination of Rio Tinto and BHP Billiton as a number of the industry's best assets would go up for sale.

If China is able to secure any of the iron assets that a potential BHP Billiton Rio Tinto deal would force the sale of, China’s reliance on three mining companies for the raw material it needs to make steel will lessen considerably.

Mr Martin Potts an analyst at Landsbanki said "The Chinese will be very happy as the deal effectively puts BHP and Rio assets up for sale, and China has the necessary cash. This gives the Chinese government the ability to diversify some of its foreign exchange reserves into hard iron ore assets.”

BHP Billiton accounts for around 15% of world iron ore sales, while Rio Tinto is responsible for 24%, which would put the combined company at 39%. Both companies own assets in Pilbara. Rio Tinto's has Hamersley Iron while BHP Billiton owns seven mining operations in the region including Mt Whaleback, the biggest single pit, open cut ore mine in the world. Both Rio Tinto and BHP Billiton are planning expansions that would double their respective production capacities at Pilbara.

Chinese are already involved with Rio Tinto at the Channar mine, owning a 40% stake in a JV with an Australian subsidiary of Sinosteel. Rio Tinto also has a 54% stake in the Eastern Range mine, a JV with Shanghai Baosteel Group.