The International Iron and Steel Institute said that European Union regulators are likely to pose the main regulatory challenge to BHP Billiton's planned takeover of mining rival Rio Tinto.

Mr Ian Christmas secretary general of IISI told the Reuters Global Mining Summit in London that "The battle will be won or lost in a European jurisdiction."

He said that "The jeopardy to consumers is very strong. Already the price of raw materials is accelerating because of tight demand. Do you really want to create artificially tight demand on top of that?"

Mr Christmas said that he saw no economic rationale for combining the two companies. He said "This is a huge transfer of wealth from consumers and society to the owners of holes in the ground. These are not small companies. They do not have problems exploiting natural resources. It seems to be a case of getting big for the sake of it."

Mr Christmas said that Eurofer and the IISI were ready to file formal objections to the bid when the EU asks for them.