It is reported that BHP Billiton Limited is considering a spin off of a portfolio of iron ore assets to deal with competition concerns over its proposed takeover of rival Rio Tinto Limited.

Australian Financial Review said that a multibillion dollar spin off to create a new iron ore competitor is being considered as an alternative to selling the assets to another major global mining house.

BHP is currently formulating its response to a statement of objections on the Rio deal from the European Commission, with most competition concerns expected to centre on the combination of the iron ore businesses of the two mining giants.