SYDNEY, Feb 6: BHP Billiton, the world’s biggest mining company, sweetened its takeover bid for rival Rio Tinto on Wednesday to $147.4 billion, but its proposal was again rebuffed.

Amid reports that Rio Tinto could become the centre of a bidding battle, the company’s management rejected the BHP offer as “not being in the best interests of shareholders.” Anglo-Australian BHP had earlier offered to exchange 3.4 of its own shares for each Rio Tinto stock, an improvement on its previous three-for-one offer that had also been rejected as inadequate.

Shares in BHP Billiton fell sharply in Sydney and London, with analysts suggesting the group might have to raise its offer to at least four-to-one to win over a sceptical Rio Tinto board.

“The market is saying maybe there’s more in it for Rio at this particular stage,” Austock Securities private client adviser Michael Heffernan said.

BHP Billiton said the combination would help to meet rising demand from resource-hungry China, but the proposed tie-up has raised concerns in Beijing because of the market power of a merged group.

Last week, state-owned Chinese aluminium giant Chinalco teamed up with US-based peer Alcoa to buy the equivalent of 9pc of the group for about $14bn.

The move was seen by analysts as an attempt to thwart a BHP takeover and The Times reported on Wednesday, citing sources close to Chinalco, that the Chinese group and Alcoa may make a counter bid for Rio Tinto.There has been speculation among market traders that Chinalco is looking to buy Rio Tinto to break the company up and that Alcoa would take Rio Tinto’s Alcan aluminium assets.

Chinalco and Alcoa said on Wednesday they were “monitoring developments,” saying any offer “should reflect the fundamental value of the company.”

The companies said last week that they had no takeover plans for Rio Tinto — but they reserved the right to make an offer in the event of a bid from another party.

China’s largest steel company, Baosteel, has previously called on the Australian government to stop the deal.

A link-up between BHP and Rio Tinto, the world’s third-largest mining group, would create a behemoth leading the planet in coking coal, thermal coal, copper and aluminium production.

The chief executive of BHP Billiton, Marius Kloppers, said on Wednesday that he expected to hold talks with Chinalco about the takeover offer, adding that he was unconcerned about the Chinese group’s investment.

—AFP