The speculations circulating as early as last week proved true as giant mining firms Rio Tinto Ltd and BHP Billiton Ltd finally admitted on Monday that the planned merger of their Western Australian iron ore operations has been ditched, with the proposal being shot down by foreign regulators.

The governments of Australia, Japan, South Korea, China, Germany and even the European Commission all balked at the idea of the seeming iron ore monopoly to be set up by the operational marriage of two resource companies that have been dominating the mining landscape of the world for some time now.

In a statement released by Rio Tinto, the company said that government regulators required the two companies to implement divestment measures that were outrightly unacceptable for both parties while some governments expressed likely disapproval of the joint venture.

Also, BHP Billiton chief executive Marius Kloppers said that the both companies were dead set on getting regulatory approvals for the proposed merger but later developments have pointed to the fact that it would not be happening, thus the mutual decision with Rio Tinto to scrap the deal.

The possibility of the operational merger of the two companies' Pilbara mining interests cropped up amidst the financial challenges that hit Rio Tinto in 2009 following its acquisition of Canada's Alcan.

However, analysts said that the ensuing strong market prices for iron ore rendered the merger talks less enticing for both firms, which both chalked up substantial recovery and gains in the months that followed the global financial crisis in 2009.

Yet in spite of the better conditions that followed the economic downturn, Rio Tinto Chief executive Tom Albanese declared that the 50-50 joint venture which was poised to save up to $10 billion of operational cost for both firms, was worth the while of both companies but after 16 months of hard work and negotiations to push the plan into realisation, he expressed disappointment that "ultimately the regulators did not agree with us."

The deal's collapse did not come as a surprise anymore as recent signs both allowed by Rio Tinto and BHP Billiton pointed to the eventual demise of the proposal with both firms asking the Australian Competition and Consumer Commission (ACCC) last month to defer its ruling on the plan as media reports last week insisted that the merger was effectively dead.