Western Australia Premier Colin Barnett said Thursday he doesn't personally favor a joint venture proposed between Rio Tinto Plc (RTP) and BHP Billiton Ltd. (BHP).

"I have a concern about having the Pilbara dominated by one" entity, Barnett said at the Australia China Bilateral Investment Seminar, referring to an Australian region rich in iron ore, where both BHP and Rio have operations.

The Rio-BHP proposal would require approval from the Western Australia state government, Barnett said.

He said he would apply close scrutiny to the proposed deal between the miners.

"I can assure you I will be taking a far stronger hand in assessing how the (Rio-BHP joint venture) relates to its customers in China, Japan, Korea and elsewhere."

Barnett struck a critical note on the way he felt miners have allowed commercial pursuits to spill over into diplomatic tensions.

"One of the problems we've had in recent times is that the relationship between Australia and China, and between Western Australia and China, has been partly determined by the actions of individual companies," he said.

"It's fine for them to pursue commercial interests, but governments have a role in the relationship between nations and policies that have been affected."

The proposed Rio-BHP deal "has a fair way to go," he said.

"I suspect the (joint venture) will occur, but not in a way that Rio and BHP might currently imagine."

The two Anglo-Australian miners' joint venture in iron ore operations emerged from the collapse of Rio's failed alliance with Aluminum Corp. of China, or Chinalco, in early June.

The proposed BHP-Rio joint venture has attracted fierce criticism in China as concerns about monopolistic tendencies in iron ore supply further cloud already troubled negotiations on this year's iron ore term prices.

Barnett told reporters he had no new details to shed on Rio Tinto employee Stern Hu, an Australian citizen held by the Chinese government on charges of stealing state secrets and bribery in the course of the miner's iron ore price talks with China.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848; chuin-wei.yap@dowjones.com