Updated from 11:06 a.m. EST

Australia's massive diversified miner

BHP Billiton

(BHP) - Get Report

has offered to take over London-based

Rio Tinto

(RTP) - Get Report

, but the overture was quickly rejected.

BHP says it wrote a letter to Rio Tinto "outlining a proposal in relation to a potential combination ... incorporating a premium."

Rio Tinto said in a statement on its Web site that it wasn't interested in BHP's terms. Under the proposal, Rio Tinto said, its stockholders would receive three shares of BHP for each share of Rio they hold. That would take the value of the deal well past $100 billion.

BHP indicated that it wasn't swayed by Rio Tinto's brushoff, saying it "intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto."

The mining arena has seen a host of deals and merger chatter in the past couple of years, and Rio Tinto itself is working on the acquisition of

Alcan

(AL) - Get Report

. At the same time, investors are speculating about who in the mining patch is going to be taken out next.

Chuck Bradford, a stock analyst at Soleil Securities in New York, says although such a move by BHP has been rumored for a while, it probably won't go through. At least part of the problem will be antitrust restrictions in Australia, which, he says, may mean the combined firm would need to sell certain assets.

A BHP-Rio Tinto combination, if realized, would create a truly massive company. Measured by market capitalization, BHP is already the largest miner in the world, worth $228 billion recently. Rio Tinto's market value was around $115 billion at Wednesday's close.

By contrast, Brazil's iron-ore giant

Companhia Vale do Rio Doce

(RIO) - Get Report

recently commanded a capitalization of $173 billion. CVRD was rumored to have wanted Alcan, and

Alcoa

(AA) - Get Report

pursued it, as well.

One way Rio Tinto may be able to fend off the unwelcome advances of BHP, or even CVRD, would be to acquire another company, says Bradford. A likely target would be

Freeport-McMoRan Copper & Gold

(FCX) - Get Report

.

Rio Tinto and Freeport already have joint ownership of the Grasberg mine in Indonesia, and Freeport is looking a lot less risky now that it has a more diversified asset base following the firm's absorption of Phelps Dodge.

Strong cash flows from a buoyant copper market have also allowed Freeport to retire some of the debt it took on when it purchased Phelps.

The news was sending shares of Rio Tinto up 23% to $440.20, while BHP lost 4.2% to $76.98. CVRD rallied 3.1% to $36.96.