Rio Tinto might walk away from a proposed A$116bn iron ore joint venture with BHP Billiton as surging iron ore prices and regulatory delays put doubts in the mind of Rio shareholders.

BHP agreed to pay A$5.8bn to Rio Tinto for an equal share of its Pilbara operations in Western Australia but with increasing iron ore prices, Rio Tinto could decide to cancel the deal unless BHP increases its payment.

The A$5.8bn equalisation payment could be reduced to A$3.6bn due to additional earnings potential from Rio assets after raising iron ore price estimates last week.

The Pilbara joint venture is also facing opposition due to fears of monopolisation from Korean and Japanese steelmakers and China, which is set to launch its own anti-monopoly investigation.