The Chinese government is expected to flag concerns over a possible iron ore joint venture between Fortescue Metals Group and Brazilian miner Vale, while market and competition regulators in Australia are already investigating the plan and the way it was announced.
Under the non-binding, preliminary agreement announced on Tuesday, the world's second largest and fourth largest exporters of iron ore will become closely aligned and will blend a portion of their ores to create a new product for sale into China.
Despite steel production growth slowing in China in recent years, iron ore remains a strategic resource for China and analysts said they expected the Chinese ministry of commerce and potentially other regulators to raise concerns.
"Antitrust could be an issue. The seaborne iron ore market is highly consolidated as Vale, Fortescue, Rio and BHP will account for more than 77 per cent of seaborne iron ore supply in 2016," said Jefferies analyst Christopher LaFemina.
"Antitrust risk is exacerbated by the strategic importance of seaborne iron ore to the Chinese steel industry and economy."
Deutsche's Paul Young also said the deal would face regulatory hurdles, particularly in China.
"We see few benefits for the Chinese steel industry apart from a more reliable/consistent feed source that may be beneficial for blast furnace efficiencies," he said.
Fortescue and Vale have already spoken with Chinese authorities about the plan, but Fortescue chief Nev Power said he was confident it did not reduce competition.
"There is no reduction in competition from this, if anything it improves the competitiveness of supply to the Chinese steel industry," said Mr Power on Tuesday.
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said the miners had not contacted the ACCC about the proposal, but his agency would examine it.
"We will look at it, but in saying that, we are not necessarily signalling any concerns," he said.
Tuesday's deal, if formalised, could also mean Vale buys a stake in a Fortescue mine and or buys up to 15 per cent of Fortescue shares on market.
Such an acquisition may attract the attention of Australia's Foreign Investment Review Board (FIRB), particularly given the Brazilian government's sway over Vale.
Originally a government-owned company, Vale was privatised in 1997 and the government given "golden shares" in the company which allows them to veto proposals if necessary.
A spokeswoman for federal Treasurer Scott Morrison said foreign acquisitions were examined on a case-by-case basis.
"The Treasurer does not comment on applications or potential applications to the Foreign Investment Review Board," she said.
"The Treasurer will consider a wide range of issues in any decision making in any foreign investment application and will rely upon detailed advice that would be prepared by FIRB."
Vale's long history of working in Australia, most notably in Queensland coal mines, may ease any FIRB concerns.
The ASX and Australian Securities and Investments Commission are believed to be investigating the market disclosures around the deal, which was announced the morning after Fortescue shares rose by 23 per cent.
Aside from Fortescue and Vale personnel, the deal had been discussed with people in China.
Mr Power said that share price rise was consistent with other rises amid the increase in iron ore prices, and was not a sign the information had leaked.
The Premier of Western Australia, Colin Barnett, said he would not be opposed to Vale and Fortescue establishing the proposed partnership.
"To me that is innovative and just part of the market process in the iron ore industry so I am not concerned about it, I think it is probably good for FMG and good for exports," he said.
"They will still pay full royalties on every piece of iron ore that is extracted from WA."