The Anglo-Australian miners announced Saturday they had agreed on all aspects of the joint venture, which is opposed by steel makers in Asia and Europe and must be approved by regulatory bodies in Australia and overseas.

"The production joint venture encompasses all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by Rio Tinto and BHP Billiton," they said in a joint statement.

"It will deliver substantial synergies resulting from combining the companies' Western Australian iron ore operations, with the aim of producing more iron ore at lower cost."

BHP chief executive Marius Kloppers said the deal was an important milestone for the shareholders of both companies.

"With the history of both companies' attempts to join together these two world-class iron ore operations in Western Australia at various times, this deal has effectively been more than a decade in the making," he said.

Submissions had been made to both the Australian Competition and Consumer Commission and the European Commission regarding the deal, the companies said, adding that they understood the EU authorities were already investigating it.

European steel makers had called for an investigation amid concerns that the merger, which the companies expect to be completed by the second half of calendar year 2010, would be anti-competitive.

Last month Rio chief executive Tom Albanese dismissed the possibility that the tie-up, under which the companies will market their product separately, would reduce competition.

"We will each get a chunk of tonnes and we will still compete head-to-head, each of us with that chunk of tonnes," Albanese told investors.

The joint venture was announced after the collapse of a 19.5-billion-dollar bid for Rio by Chinese state-owned firm Chinalco.

It also followed BHP's dropping of a hostile takeover bid for Rio amid the global economic turmoil in November 2008.

Glyn Lawcock, head of resources research at UBS in Australia, said the joint venture signing would quell any talks of a full BHP-Rio merger in the short term, but added that BHP could be testing the waters for a future takeover.

"Or BHP could be of the view that they probably don't have a chance of getting a full merger through the EU so this is the next best thing," Lawcock told AFP on Sunday.

The joint venture will allow BHP and Rio to enjoy the bulk of the synergies they would have achieved if the original takeover, which BHP walked away from before it could be fully tested by regulators, had gone ahead, he added.

Lawcock said shareholders were unlikely to reject the joint venture, which he said would not be see as "as bad a deal as the Chinalco deal".

"The journey is still probably at least six plus months away from completion," he said. "So I think it's a journey that still has a number of hurdles to over come, least of which is the EU regulatory body."

Brazilian miner Vale is the biggest iron ore producer globally but BHP Billiton and Rio Tinto are the world's second and third largest producers.

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