BHP Billiton is confident its proposed merger with rival Rio Tinto will not be derailed by big customers, such as China, who fear a merged mining giant would dictate metals prices.
Responding to steelmakers' concerns that a merger would carry too much clout on pricing, particularly in iron ore, BHP Chief Executive Marius Kloppers said the market, not BHP, would set prices.
Kloppers, speaking at BHP's annual meeting on Wednesday, also dismissed speculation that China might launch its own bid for Rio Tinto through its cashed-up sovereign funds.
"We don't see a risk," he told reporters later.
BHP, the world's biggest miner, wants to acquire third-ranked Rio via a 3-for-1 share offer which, at $120 billion, would be the second-biggest takeover after Vodafone's $203 billion buyout of Mannesmann in 2000.
A successful deal would forge a $350 billion-plus super miner, controlling much of the world's iron ore, copper and aluminum, raw materials that are helping drive economic growth in big emerging markets such as China and India.
Kloppers was confident that customers' concerns over a merged entity's pricing power would not wreck a deal.
"We know our customers well and we will continue to talk with them about these and other issues," he told about 500 shareholders at the AGM in Adelaide.
"Many already see the logic of our proposal and the benefits of (getting) more product to market more quickly," said Kloppers, who has spent the last two weeks briefing investors and customers on the merger proposal.
Some shareholders doubted the logic behind the "Big Australian" getting so much bigger.
"I'm not too sure taking over Rio Tinto is a good idea, particularly if it drives someone like China to use government money to take 20, 40, 50 percent or more of the new company to maintain control over commodities prices. Then what happens to our shares?" said Dean Kemp of Adelaide.
Others, like Trevor Charlesworth, were all for it. "The synergies are very evident between BHP and Rio Tinto. I fully support a merger. It will make our shares more valuable," he said.
Kloppers, who took over as chief last month, maintained that customers would benefit from a merged group's ability to dig out more minerals and ship them faster.
He said BHP would continue to talk to customers about "issues of concern," mainly pricing influence, as it pressed Rio's board to agree to talks.
Rio has rebuffed BHP's approach as too low given its assets and growth prospects.
Failure to get Rio to open talks could force BHP to go hostile, analysts have said, with the market looking for a top-up to the current offer.
"Kloppers is hoping BHP can pay face value for Rio, but that's not the way it works in this type of market," said James Wilson, analyst at Perth-based broker DJ Carmichael. "Rio has made it clear it has the assets to go it alone. At the price out there now, it does not need BHP."
How long will BHP keep its proposal on the table?
"We are very patient people," said Kloppers, a South African educated in Pretoria, France and the United States.
The merger proposal has riled some big customers who spend billions of dollars with BHP each year for iron ore in Australia, copper in Chile and for business in over a dozen other countries.
German steelmakers this week urged the European Union's executive Commission to block any deal. Last week, Chinese, Japanese and Korean steelmakers strongly voiced their concerns.
While Rio holds out against what is still an informal offer, there has been speculation that Anglo American, Brazil's CVRD and Xstrata might come in with rival offers. Rio Chief Executive Tom Albanese on Monday said he had not "engaged" any other bidder.
Rio has outlined its own independent growth blueprint, centered on plans to spend $2.4 billion on new iron ore mines in Australia, an increased dividend and asset sales that would generate billions of dollars.
BHP's Australian shares closed down 1.6 percent at A$41.30 in a weaker overall market, while Rio eased 0.6 percent to A$135.00.