The China Iron and Steel Association said it opposes the proposed iron ore joint venture between mining giants Rio Tinto and BHP Billiton, saying it had a "strong monopolistic tint".
Anglo-Australian Rio pulled out of a proposed 19.5 billion dollar tie-up with China's Chinalco earlier this month and decided to go into the joint venture with rival BHP.
But in a statement on its website, the Chinese industry group said: "A joint venture agreement like this has a strong monopolistic tint. Chinese steel companies are resolutely opposed to striking the deal."
It added in the statement Tuesday: "China is the largest importer of Australian iron ore. Such a BHP-Rio joint venture has a bearing on the immediate interests of Chinese companies."
Separately, the Chinese association told domestic mills that it would suspend their licences if they were found to have resold imported iron ore at a profit, according to the statement.
State-run Baosteel Group is the country's largest mill and the only one authorised to negotiate annual iron ore contract prices on behalf of the nation's steel industry.
Other mills are not allowed to enter discussions with overseas miners.
The association has also said that China will not accept a cut of only 33 percent in 2009-10 contract prices — as agreed by most Asian steelmakers with the big miners — saying a cut this small would cause "industry-wide losses".
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