Rio Tinto, which had already rejected an initial approach from BHP Billiton last year as too low, said its board was unanimous in turning away an offer that would create the dominant global player in iron ore.

''BHP Billiton's offers, while improved, still fail to recognize the underlying value of Rio Tinto,'' said Chairman Paul Skinner.

BHP Billiton is already the world's largest diversified mining company, and Rio Tinto is the third-largest. Analysts say that if the deal succeeds it would be the biggest takeover in the mining sector and one of the biggest ever in the corporate world.

Steelmakers in China, Japan and Europe have protested BHP Billiton's bid, contending that a takeover would give it too much influence over global iron ore supplies and pricing. BHP Billiton accounts for around 15 percent of world iron ore sales, while Rio Tinto is responsible for 24 percent, which would put the combined company at 39 percent.

BHP Billiton - which also reported a 2.4 percent drop in six-month net profit on Wednesday - is offering 3.4 of its shares for every one Rio Tinto share, an increase from the initial informal proposal of three-for-one, the Melbourne-based company said. The offer applies to both Australian-listed Rio Tinto Ltd. and British-listed Rio Tinto PLC.

The proposed deal would deliver efficiency benefits worth $3.7 billion a year and raise the value of shareholdings in both companies, BHP Billiton's CEO said.