A proposed joint venture between BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RTP) to merge their Western Australian state iron ore mining businesses won't lessen competition between the two to market the raw material, Australia's Trade Minister Simon Crean said Wednesday.

The proposed merger would see the two companies, which dominate exports from the Pilbara region in Northwest Australia, share iron ore export facilities in a bid to gain efficiencies and get costs down, he said.

"They will still operate as separate marketing arms, they will therefore be competitors and so there won't be any lessening of competition," Crean told reporters.

"When the details of the proposal emerges there will be acceptance of that," he added.

China has raised concerns about an Australian export monopoly emerging as a result of the proposal.

The proposed merger of BHP and Rio iron ore operations came after the collapse in early June of a proposed US$19.5 billion deal between Rio Tinto and Aluminum Corp. of China, or Chinalco.

Rio Tinto Chairman Jan du Plessis said that improving market conditions were behind the decision to terminate the tie-up with Chinalco, which had been designed to ease Rio's US$38.7 billion debt burden.

Crean said the government doesn't have any bridge building to do as a result of Rio backing out of the deal with Chinalco, which he described as an "eye-opener" for China. "It's going to be an important learning curve for China" to understand the role that shareholders have in these considerations, he said.

"It was the shareholders' reaction that fundamentally saw Rio go off and cut another set of arrangements."

Beijing accepts that the Australian government was genuinely trying to work through the national interest implications of the Chinalco proposal and that it wasn't any decision by the Australian Government that saw the proposal fail, he said.

A US$1.39 billion purchase of assets of Australia's OZ Minerals Ltd. (OZL.AU) by China Minmetals Non-ferrous Metals Co. is a good example of how Australia can accommodate Chinese investment, including by a state-owned enterprise, he said.

Crean also said stalled talks between Australia and China about a free trade agreement weren't connected in any way with Rio's proposed deal with Chinalco.

"The re-opening of the FTA with China is fundamentally now in China's hands at the political level," he said.

"I don't think there's any point at this stage in continuing negotiations at the official level, because they've run to a standstill...and need the political will injected," he said.

-By Ray Brindal, Dow Jones Newswires; 612-6208-0902; ray.brindal@dowjones.com