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Rio Tinto on the NYSE.

Rio Tinto, fresh from its acquisition of Alcanearlier this year, has formally rejected BHP Billiton'sall-stock takeover play.

Australia's BHP Billiton is trying to create a mining colossus worth more than $350 billion US. It confirmed Thursdayit had written to the management ofRio Tinto, offering to exchangethree of its shares for every share of Rio Tinto.

The stock swap offer values Rio Tinto at more than $100 billion.

But on Thursday, the Anglo-Australian Rio Tinto group said no— at least, not at that price.

"The boards of Rio Tinto have given the proposal careful consideration and concluded that it significantly undervalues Rio Tinto and its prospects," it saidin a statement.

But BHP said it's not about to back away from the pursuit of its rival. It said it "intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto."

That opens up the door to the possibility of a sweetened bid from BHP — either more shares or the addition of a cash component — or the bid could turn hostile if BHP were to godirectly to Rio shareholders.

Analysts also say Brazilian mining giant CVRD, which bought Inco last year, could make a bid for Rio Tinto. Rumours swirled earlier this year that CVRDand BHP Billiton would makea joint bid for Rio.

Rio Tinto shares soared 23 per cent on Thursday as investors bet that a takeoverwould happen at some point, giving them a juicy premium.

Rio Tinto won the bidding war forMontreal-based Alcan this summer with a $38.1 billioncash offer, trumping a $28-billionbid from the American aluminum giant Alcoa.

Consolidation in the global mining sector has intensified in the last few years as metals prices soared on burgeoning demand from China.