Companhia Vale do Rio, the Brazilian mining giant, has hired bankers to consider a possible bid for Xstrata, the latest move in a fast-consolidating industry that could value the London-listed miner at more than £38 billion.

It is believed that the process is at an early stage and that no decision has been made about approaching the Xstrata board with a bid. A source close to the process said: “It’s one of the options being considered. There’s pressure for people to do things because there’s very little left up for grabs.”

A bid by the Brazilian group, formerly known as CVRD but recently renamed Vale, comes after BHP Billiton’s $140 billion (£69 billion) approach to the rival Rio Tinto, which Rio has rejected. It is the latest twist in what many experts believe will be a boom in mergers in the mining sector driven by the fierce price growth and demand for commodity metals from emerging markets, such as China and India.

Xstrata shares closed up 8 per cent at £36.56 yesterday. It was the biggest gainer on the FTSE 100, as rumours swirled of a possible bid approach. Traders pointed to Anglo American as the most likely potential suitor, although a source close to the matter denied that Anglo was contemplating an approach. Roger Agnelli, the Vale chief executive, sought yesterday to play down talk of a potential bid. He told Dow Jones: “If we bought everyone that we were rumoured to buy, we would have acquired the entire world by now.”

Meanwhile, Tom Albanese, the chief executive of Rio Tinto, has stepped up his rhetoric against BHP Billiton’s takeover proposal to combine the two companies, claiming that it was “dead in the water”. His comments came after Baosteel, of China, another potential bidder for the group, made clear that it would not be making any offer for the miner, saying that it lacked the financial clout to do so.

Mick Davis, the chief executive of Xstrata, said this week that BHP’s move would spark a wave of further consolidation. He said: “We are the most perfectly positioned company in the industry, the company which is going to benefit from consolidation in any way that it actually transpires.”

Xstrata is the world’s fifth-largest mining group and the fourth-largest producer of copper. Under Mr Davis, Xstrata has embarked on a series of acquisitions as part of an effort to become a global mining leader.

Last year the group, part-owned by the Swiss metals trader Glencore, won a C$20 billion (£9.8 billion) hostile bid battle for control of Falconbridge, of Canada, breaking up an agreed deal with the domestic player Inco.

However, it lost out this year in its attempt to buy LionOre, the Canadian nickel and gold producer, deciding not to match a £2.4 billion hostile offer from Norilsk Nickel, of Russia.

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