The tie-up of the miners' vast iron ore operations in Western Australia's resource-rich Pilbara region is expected to generate more than 10 billion US dollars in savings, but is opposed by steel-makers in Asia and Europe.

Rio's iron ore chief executive Sam Walsh said the merging of operations could be held back until late this year.

"We'd expect that approvals would be more likely later this year than the original time frame," Walsh told a conference in Perth.

"Work does continue on the proposed joint venture through the three main work areas of commercial, regulatory and integration, each of which is very complex and demanding."

The joint venture had been due to take effect in the second half of 2010 but was subject to regulatory approval from competition bodies in Australia and overseas.

European steel-makers have expressed concerns that the merger would be anti-competitive, something which has been dismissed by Rio chief executive Tom Albanese, who said Rio and BHP would market their product separately.

The synergies of a Rio-BHP tie-up have been mooted for years -- with BHP most recently dropping a hostile takeover for Rio in November 2008 amid the global economic turmoil.

BHP Billiton and Rio Tinto are the world's second- and third-largest producers of iron ore, after Brazil's Vale, and confirmed Tuesday that annual negotiations on contract prices for the key steel-making ingredient were ongoing.

Speaking at the same conference as Walsh, BHP Billiton's iron ore president Ian Ashby refused to comment on reports that some price deals have already been signed.

But he said: "Negotiation season is happening at the moment and all those things we've seen over the past few years are happening again."

Rio Tinto's Walsh said talks to set a benchmark price for the coming year, which collapsed with Chinese steelmakers last year after they demanded a greater discount than other Asian buyers, were ongoing but needed to adapt.

"Negotiations are under way and I'm not aware that anyone has actually signed an agreement," Rio Tinto's Walsh said.

Walsh said the wide disparity between the existing benchmark system and the spot market needed to be addressed.

Chinese steelmakers are increasingly buying from the spot market, currently priced above 140 US dollars a tonne, as they scramble to secure iron ore. The benchmark price is about 62 US dollars per tonne.

"That is not sustainable. The benchmark system does have to evolve," Walsh said.

"Whether it evolves to a quarterly system or some other mechanism, time will actually tell. It will be something that actually reflects the market dynamics -- that's what we're seeing."

Walsh said he would make no comment on the ongoing trial of four Rio employees, including Australian Stern Hu, who are facing bribery and industrial espionage charges in Shanghai.

-- Dow Jones Newswires contributed to this story --

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