Rio Tinto, BHP to drop Australian iron ore merger: report

Anglo-Australian mining giants Rio Tinto and BHP Billiton are to scrap a proposed merger to combine iron ore operations in western Australia, the Sunday Times reported.

A formal announcement is expected this week, possibly at BHP's shareholder meeting in London Thursday, the newspaper said.

BHP and Rio, the world's second and third largest iron ore miners, want to combine their operations in a 50-50 joint venture in the Pibara region of western Australia.

Last week, the two mining giants reacted with "disappointment" to the German Federal Cartel Office's statement saying its current intention was to prohibit the joint venture.

Competition authorities in Europe and Asia are examining the project.

European steel makers, anxious about rising iron ore prices, contend that the plan is anti-competitive and could in particular penalise the German auto industry.