Resource-hungry China, increasingly worried about the rising cost of iron ore mines abroad, could tighten regulation over its companies` investments to reduce risk and costly competition.

The National Development and Reform Commission, the country`s top economic planning agency, said in a statement it would increase guidance over domestic firms venturing abroad in search of mines as iron ore prices surge.

"With iron ore prices seeing an explosive rise, many domestic firms are very enthusiastic about investing in overseas mines, which needs strengthened macro guidance from the country," the NDRC said.

"Globally, iron ore mines that are of high quality and easy to exploit are basically at the hands of major multinational companies. Our firms need to pay a high cost to mine iron ore resources abroad," it said.

"Their exploitation risks and costs are increasing." In the financial sector, some policy makers have already counselled caution over the rush to invest overseas, saying China still lacks expertise, especially after big paper losses by its sovereign wealth fund and banks on investments made last year.

China has limited steel mills` and traders` ability to buy spot iron ore for several years, after blaming speculative buying for lifting spot prices and undermining its negotiating position in term contract talks.

As part of its preparations to draw up a strategic blueprint on overseas mining, the NDRC has set up a research team including members from top steel firms, industry think-tanks and other ministries.

While it did not specify any actions, in the past Beijing has set minimum volume and capital thresholds for companies authorised to import iron ore, export coke, and mine domestically.

The statement also said that China`s own ability to supply iron ore was weakening because of disorderly exploitation and insufficient investment.

In 2007, China produced just over 700Mt of iron ore, well below its target of 800Mt, as easily accessible iron mines were depleted.

China`s March iron ore imports slid 6.6% to 35.68Mt from a monthly record of 38.21Mt in February.

Annual talks to set term-contract iron ore prices have extended into the new fiscal year that began on April 1, as Australian miners seek a premium on top of the 65% price increase for iron ore concentrate agreed to by their Brazilian rival.