BHP Billiton, the world's largest mining company, has rebuffed an approach from Chinalco to discuss the Chinese company's acquisition of a 12 per cent stake in Rio Tinto.

The state-owned aluminium producer is understood to have written to Don Argus, the BHP chairman, “hoping to open a dialogue” after blocking BHP's £65billion bid for Rio.

BHP received the faxed letter on Friday, as Chinalco's £7.1 billion share raid was being announced. The Chinese are not thought to have received a reply.

The Takeover Panel in Britain has given BHP until tomorrow at 5pm to make its takeover approach to Rio formal or walk away for six months. If the deal is successful, it would create Britain's largest company, with a market capitalisation of about £150 billion.

However, Chinalco's decision to buy a stake in Rio has thrown BHP into apparent confusion.

The company was not certain yesterday even whether Marius Kloppers, its chief executive, would be in London tomorrow to brief analysts on its full-year results.

Chinalco bought Rio stock at £60 a share, effectively putting a 20 per cent premium on the world's second-largest miner. BHP's offer values Rio at £49.47 a share, a discount to Rio's £55.05 closing price yesterday.

Shareholders will expect BHP to at least match Chinalco's valuation of Rio if its all-share proposal is to be successful - something that BHP has previously indicated that it would not do.

Mr Kloppers and Mr Argus were locked in talks with advisers over the weekend, but there was no indication yesterday on whether they had decided to raise their three-for-one share offer. However, sources close to the company confirmed that BHP would not wait until Wednesday to make its intentions known. It will reveal its decision at 9.30pm tonight when its results are released in Australia.

Chinalco's stake in Rio was seen initially as a blocking move by the Chinese to prevent a BHP-Rio merger that would create the world's largest iron ore, aluminium and coal supplier - all resources vital to China's booming economy. A merged BHP-Rio would control about 36 per cent of the world's iron ore, which is used to make steel, and consolidate 75 per cent of that market in the hands of only two companies.

However, Chinalco's offer to discuss the share acquisition raises the possibility that the Chinese company is not entirely opposed to BHP's proposal to buy Rio.

If that is the case, Chinalco's strategy instead may be to break up Rio. China's aluminium production has been hit by power shortages and Chinalco's move on Rio, the world's largest aluminium producer, could be an attempt to gain control of some of its smelters.

Alternatively, Chinalco might simply want to use its shareholding to gain access to Rio's aluminium smelting technology and partner it on new projects. The stake would also allow China to recoup through dividends some of the money that its companies are spending on Rio's resources.

Michael Rawlinson, mining analyst at Liberum Capital, said: “It is not clear what the precise motivation for the stake build has been. Our view is that a frustrated ‘China Inc' was not happy at being ignored by both BHP Billiton and Rio Tinto in this bid situation, so has bought a ticket to the negotiations and come away with several potentially attractive outcomes, where before it had none.”

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