It is reported that TATA Steel has backed BHP Billiton's proposed merger with Rio Tinto, by saying that it will be good for the steel industry.

Mr B Muthuraman MD of TATA Steel said that while there are some concerns that a combined entity could drive up market prices for iron ore, the merger is in the best interests of the industry.

He added that "It is a natural thing to happen. I think it is good for the commodity industry which has had serious cycles over the last 25 years to 50 years. It is time I think that both the steel industry as well as the commodity industry consolidate assets."

Incidentally, opposition to the merger move has emerged from steel mills and lobby groups in Europe and Asia, including International Iron & Steel Institute, the China Iron & Steel Association, Japanese steelmakers and South Korean steel maker POSCO.