Rio said it had rejected Noranda’s due diligence request – the second in less than a month – because of an agreement with South Africa’s Billiton, which topped Noranda’s bid with a friendly offer of C$1.7 billion, Reuters reported.

Noranda has agreed to sell 50% of Rio Algom’s assets to Chile’s state-run Codelco, the world’s largest copper producer, if its bid is successful.

However, many analysts have questioned the wisdom of Billiton’s bid, which is just part of an ambitious acquisition program.

On Wednesday it announced it would pay Alcoa US$1.49 billion for a further 56% stake in the Worsely alumina refinery in Western Australia, and it earlier bid US$393 million for 30% of the Gove aluminium facility.

The market is betting Noranda will raise its offer for Rio Algom, and Billiton-watchers fear the company will be forced to pay too much for its ambition to become a leading copper producer.