BHP Billiton said its $116bn iron-ore agreement with Rio Tinto is close to being finalised, dismissing talks that the latter was baulking at the deal.

The two major iron-ore producers initiated the deal in June following a 25% drop in Rio’s share price.

BHP and Rio plan to merge their iron ore operations in Australia in a bid to save $10bn per annum on capital and production costs, according to Reuters.

BHP chairman Don Argus said there is no weakening in Rio’s commitment to the deal.

BHP chief executive Marius Kloppers said the two companies will submit the major documents to regulators by the end of the year, with the main terms of the deal to be hammered out shortly.

According to investors, the European Commission is the main obstacle to the joint venture, having voiced concern in 2008 about control over the iron ore market when BHP planned to acquire Rio, a deal which was eventually scrapped by BHP.