Brazilian mining company Vale SA (VALE) sees the joint venture planned by BHP Billiton (BHP) and Rio Tinto (RTP) limiting China's chances of arbitrating supplier iron-ore prices, the Estado news agency reported Friday.

According to Vale's chairman, Sergio Rosa, Vale's main worry had been that Rio Tinto's financial difficulties would force it to cut ore prices to gain market share in the global economic crisis.

"It's bad for any supplier in a negotiation to be in a position of weakness that forces it to sharply lower its prices in order to guarantee a market," he said.

"That was the fear we had with Rio Tinto. B-ut, I think that danger is being avoided," he added.

Rosa said he believed Vale would benefit indirectly from the BHP-RTP tie-up.

Vale has stated it will only agree to ore term prices once the Australian mining companies have settled.

China has been pressing for a 50% reduction on the 2008 contract price, but the market consensus points to a likely cut of much less, with large investment banks forecasting Vale's cut at around 27%.

Rosa also said he expected there would be operational synergies between Rio Tinto and BHP through cutting costs.

By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; john.kolodziejski@dowjones.com