Blackstone, the American private equity firm, is to join the battle for Rio Tinto with a break-up bid, according to reports last night.

It was understood that Blackstone is proposing to sell-off the Australian mining group’s core iron ore business, which it values at $110 billion (£54 billion).

Blackstone was said by the Daily Telegraphto be in the process of building a consortium for the approach that includes a Chinese sovereign wealth fund.

Rio Tinto has earmarked $30 billion of disposals of noncore parts of the business as part of its defence against BHP Billiton’s £67 billion three-for-one share offer. Last week Tom Albanese, the chief executive of Rio Tinto, said that BHP Billiton’s $140 billion takeover proposal was “dead in the water”, adding that it did not create sufficient value.

BHP Billiton claims to have found annual synergies worth $3.7 billion to be reaped by merging the two mining giants, the second and third-largest in the world. The savings would largely be a result of consolidating iron ore assets in the Pilbara region in northwestern Australia. Mr Albanese said last week that Rio had received several other approaches.

Separately, Sinosteel, of China, is bidding for Midwest Resources, another Australian miner, with an eye on its iron ore resources.

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