Analysts at Credit Suisse, one of the banks underwriting Rio's US $15.2-billion rights issue said BHP and Rio have been estimating $10 billion worth of benefits on the conservative side. The actual hidden synergy of combining their adjacent iron ore mines, ports and railways could be twice the amount say analysts in a communication to clients.

BHP and Rio last week signed a deal to form a $116-billion iron ore giant, which is expected to take a year to complete. The EU competition regulator and the European Commission are expected to provide the biggest hurdle to the creation of the giant iron ore company.

Opposition to the deal, which will create the world's largest iron ore miner, is expected to be strong and yesterday the Japan Iron & Steel Federation lent support to other global industry groups in denouncing the deal as anti-competitive.

Federation chairman Shoji Muneoka, who is also president of the biggest Asian steelmaker, Nippon Steel, said that the establishment of the joint venture would mean integration of all iron ore production of the two companies in Western Australia.

Other associations that have opposed the deal include he China Iron & Steel Association, the World Steel Association and EU steel group Eurofer in opposing the deal.

The BHP Rio deal raises concerns among steel makers as the tie-up would mean the group acquiring control over 40 per cent of the global iron ore trade. That would give the group too much control over pricing and supply.

Meanwhile BHP Billiton chief executive Marius Kloppers is expected to be in Perth next week to meet West Australian Premier Colin Barnett over the deal with Rio Tinto.

Barnett has opposed the joint venture arguing that it has been structured to avoid $1 billion in stamp duty. He has warned that he would be looking for a new BHP-Rio deal with a $300 million increase in royalty payments.

BHP was not willing to disclose Kloppers' travel plans but it is known that he will be meeting key institutional shareholders in Sydney before making his way west this week.

It is also known that Leighton Contractors and Macmahon, leading mining contractors to BHP would be squeezed out of BHP's Pilabara operations under the deal and also on BHP's response to its safety issue in the Pilbara.

BHP and Rio have agreed to adopt the principle of an owner-operator model for the joint venture so that it utilizes employees in preference to contractors. The move also comes in the wake of five fatalities in 10 months at BHP's operations which include three with Leighton which has left BHP looking to improve its safety record.

Leighton and Macmahon are the main contractors to have been hit by the uncertainty about their on-going activities with BHP in the Pilbara. The uncertainty has led to heavy fall in the price of their shares with Leighton down 2.9 per cent to $23.85 and Macmahon down 5.2 per cent to 36 cents.

A spokesman for Leighton denied the company expected any significant changes to current contract mining activities with the joint venture expected to come into operation only in mid-2010. He added that they had long association with BHP Iron Ore going back 20 years on some projects.

Macmahon said that they had not been advised of any intention to change their mine operations either by BHP or Rio Tinto at the locations where they were currently working.