Business Spectator - BHP Billiton Ltd and ArcelorMittal are in talks to combine their iron ore interests in Liberia and Guinea into a single joint venture.
The miner said that a combination of these interests should provide an excellent platform for the companies to develop a substantial iron ore business in West Africa.
"The partners will continue to assess the merits of a potential joint venture and will work with the respective governments of Liberia and Guinea to seek their support," BHP said in a statement.
"It is anticipated that this will take several months."
Arcelor Mittal said that a tie-up would help make the iron ore interests of both companies in the region more competitive.
"The parties will be working together over the coming months to assess the merits of a partnership and will also work closely with the governments involved," ArcelorMittal said in a statement.
ArcelorMittal's iron ore assets straddle the border between Guinea and Liberia. Its mining there is in the process of being revived since the end of the civil war in Liberia, but is not currently active. It expects first shipping in 2011.
Neither ArcelorMittal nor BHP, the world's largest mining group, would specify the size of their deposits.
ArcelorMittal has been pushing to increase its self-sufficiency in iron ore in recent years. The African venture would be its first combination of iron ore assets.
It said in the second half of last year that it planned to reinitiate some projects to capture growth in emerging markets and to continue to expand into mining.
Analysts said BHP would benefit by allowing it to ship ore from Guinea through the Liberian coast, cutting hundreds of kilometres from the access route, and ArcelorMittal would benefit from BHP's mining expertise.
"We view this potential merger of operations, though long-dated, as positive for both stocks since it should deliver material capex and opex synergies through shared infrastructure and transportation," analyst Michael Rawlinson at Liberum Capital in London said.

Potentially huge mines
While the companies declined to give details of the size of the deposits, analysts said they were potentially huge.
BHP's deposits in Guinea are estimated to contain about 6 billion tonnes of ore resources while ArcelorMittal's assets in Liberia have around 1.5 billion tonnes, Mr Rawlinson said.
The two firms' iron ore deposits straddle the border between Guinea and Liberia and are part of the same geological structure, analysts said.
ArcelorMittal's mining operations there are in the process of being revived since the end of the civil war in Liberia, but is not currently active.
It expects first shipping in 2011.
"The combination of these interests together with each firm's execution capabilities and financial strength would provide an excellent platform on which to build an iron ore business in West Africa of world-class scale and scope," a statement said.
A venture with ArcelorMittal might enable BHP to develop its iron ore deposits in Guinea faster than rival Rio since it would reduce the length of a railway needed to ship the ore by cutting through to the Liberian coast.
Rio has not yet given the green light to develop its massive Simandou project in Guinea partly due to logistics since the deposit is some 700 km away from the coast of Guinea.
ArcelorMittal has been pushing to increase its self-sufficiency in iron ore in recent years. The African venture would be its first combination of iron ore assets.
SNS Securities said in a note that ArcelorMittal's African iron ore assets would be particularly important to its South African unit , which was in talks with Anglo American unit Kumba Iron Ore about higher prices for a long-term contract.
ArcelorMittal said in the second half of last year that it planned to reinitiate some projects to capture growth in emerging markets and to continue to expand into mining.
Rio Tinto -- the world's second largest iron ore producer -- and BHP last month signed a $US116 billion iron ore joint venture agreement to combine their Western Australian iron ore operations.
That venture, which the two firms say will save around $US10 billion, has faced opposition from steelmaker customers and must get approval from the European Commission anti-trust officials.
Brazil's Vale is the world's top iron ore miner.