Rio Tinto mine
Rio Tinto mine - 
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KAI RYSSDAL: Today's corporate giant you might never have heard goes by the name BHP Billiton. It's the biggest mining company in the world, and wants to get bigger. Today the Australian firm sweetened its offer to buy a big rival, and at the same time get control of more than a third of the world's iron ore production. That rival, Rio Tinto, rejected the bid out of hand. It says $147 billion still isn't enough. Rio's a British and Australian joint venture.

Marketplace's Bob Moon reports that China's the real force behind the deal.

BOB MOON: The Chinese have an iron will to fend off this merger. Their steel industry is the world's biggest, four times bigger than the U.S., and growing. In fact, we get much of our steel from China, but the Chinese need the ore to make that steel, and they aren't alone in fearing a new mining colossus could drive ore prices higher.

BHP argues, combining the companies would save billions by getting rid of overlapping operations, bringing more ore to the market faster and cheaper, but Fredric Gits of the Fitch Ratings agency says BHP isn't waging this battle with altruistic intentions.

FREDRIC GITS: With this market pricing power, it's unlikely that the ultimate buyers of their product would benefit. They are not going to pass it through to the end customers just for the pleasure of passing it through.

Even if shareholders approve, the merger would need to clear regulators in Australia, Britain, the U.S., Japan and Korea. And amid tight credit it'll be tough to find investors for the biggest bank loan in history, $55 billion to help fund the deal. That amounts to the gross domestic product of New Zealand. The Chinese aren't sitting idly by either. The state-run Aluminum Corporation of China, Chinalco, just joined forces with America's Alcoa Corporation to quietly grab up a 10 percent stake in Rio Tinto. Mike Komesaroff is an industry consultant. He says that could complicate BHP's takeover plans.

MIKE KOMESAROFF: I've got to take my hat off to Chinalco. It was a perfectly executed transaction. This was a high-profile set of shares that they acquired under the noses of the world, without people realizing it.

It sets the stage for a clash of the titans that could take months to play out.

In Los Angeles, I'm Bob Moon for Marketplace.

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