However, analysts were quick to water down the possibility of the two mining goliaths teaming up, saying that even if a bid for Rio did go ahead it would be hard to see how they would divvy up Rio's iron ore, copper and aluminum assets.
"I would find it intriguing, if they were to launch a successful bid for Rio, how the assets would be divided up because I would imagine those companies would be interested in acquiring Rio for the same reasons and the same assets," Fat Prophets analysts Gavin Wendt told MiningNews.net earlier today.
Investors welcomed news of the rumoured takeover bid with Rio’s share price closing $3.30 higher at $99, while BHP closed the day 46c higher at $38.90.
Commodity prices on the London Metal Exchange continued their downward trajectory, with nickel and copper tracking lower overnight.
Nickel traded three-month on the LME fell $US1400 to $27,300 per tonne due to higher stockpiles, while copper shed $150 to $7160/t, despite a 2% fall in stockpiles.
Spot gold fell 20c to $682.20 an ounce, while zinc closed down $130 to $2820/t and lead shed $76 to $2923/t.
On the subject of lead, a parliamentary inquiry in Western Australia has found the Department of Environment and Conservation (DEC), the Esperance Port Authority, Magellan Metals and BIS Industrial Logistics failed to protect Esperance residents from lead contamination.
The inquiry was launched earlier this year following the death of thousands of birds and tests that revealed elevated lead levels in Esperance residents’ blood streams and water tanks after lead concentrate leaked while it was being loaded at the port.
Ivernia subsidiary Magellan Metals has been at the centre of the contamination, being the only company to export lead out of the Esperance port. The company was forced to declare force majeure on its sales contracts following the DEC's ban on the shipment of its lead concentrate.
“These regulatory failures, combined with irresponsible and possibly unlawful conduct of the Esperance Port Authority, Magellan Metals Pty Ltd, and BIS Industrial Logistics, exposed workers and the community to unacceptable and avoidable health and environmental risks,” the inquiry report said.
Meantime, a major development agreement was signed between Chinese steel company Anshan Iron and Steel Group (Ansteel) and joint venture partner Gindalbie Metals to develop its $1.8 billion Mungada hematite and Karara magnetite projects, both 225km north of Geraldton in Western Australia's Mid-West.
Uranium miner Paladin Resources has told Dow Jones newswires that it may be a mergers and acquisitions target because of a sharp fall in its share price in the past few months.
After acquiring 100% of Valhalla Uranium and 81.9% of Summit Resources, Paladin will become an M&A target if its share price slide continues, the company's managing director John Borshoff said.
“I think it could [be vulnerable to M&A] - I think that we're the best
value stock around in terms of the uranium market,” he told Dow Jones newswires in an interview on the sidelines of the Africa Downunder conference held in Perth.
The Perth-based company, which reached a 52-week high of $10.80 in April, closed the day down 16c at $5.80.
