By Katie Hunt
Business Reporter, BBC News
The world's biggest miner wants to be even bigger.
The two firms control a third of the world's iron ore supplies
Not content with annual revenue equal to the size of Vietnam's economy, Anglo-Australian mining giant BHP Billiton has formalised a bid to buy close rival Rio Tinto.
The $147bn (£74.8bn) offer sets the stage for the world's second-largest takeover.
The bold move is raising hackles among the many countries that depend on the raw materials the mining firms provide, especially China.
Together, the two companies would control a third of world's supply of iron ore, the chief raw material for steel, and around 10% of copper and aluminium supplies.
It would also dominate the production of uranium, which fuels nuclear power plants.
"Having control over a greater percentage of the worldwide supply of iron ore, and other commodities, gives them a much stronger negotiating position," says Charles Kernot, metals and mining analyst at Seymour Pierce.
China potentially has the most to lose should the proposed merger go through.
The two firms supply about 40% of China's iron ore imports and are believed to be aiming at a 70% price hike this year.
BHP Boss Marius Kloppers has made a bold move
China's white-hot economic growth has created an insatiable demand for steel to help power its manufacturing juggernaut.
In the early years of its rush to industrialise, the country's domestic mining kept pace with demand. But since 2000, China has been forced to buy from overseas, with iron ore imports totalling 383 million tonnes last year - a 17.4% rise.
Iron ore prices have almost tripled over the past decade from around $38 to $110 a tonne.
Most of China's iron ore imports come from the deposits mined by Rio and BHP in the rusty coloured earth of Australia's outback - dubbed the world's quarry.
Given its huge appetite for raw materials, some have viewed China's decision to spend $14bn on a 9% stake in Rio Tinto, the country's biggest overseas investment, just days before a deadline requiring BHP to submit a formal bid as a blocking tactic.
China fears that a merger of Rio and BHP could put a stranglehold on iron ore supplies.
Rio and BHP supply 40% of China's iron ore imports
The state-run Aluminium Corp of China, or Chinalco, teamed up with US firm Alcoa to buy the stake in Rio's London listed shares.
John Meyer, head of commodities at Fairfax Investment Bank, says every $10 per tonne increase in iron ore prices means China has to pay an extra $4bn to Rio and BHP.
"You can see why they might want to throw one or two billion dollars to stop this deal going through," he told BBC News.
There is speculation that China might now launch its own bid to take control of Rio Tinto but analysts say this could be a step too far given unease, especially in Australia, about foreign ownership of strategic assets.
More likely, they say, is that China wants a seat at the table and has its sights on some of Rio's supplies of bauxite and alumina - the main products of Chinalco.
"It's difficult to know whether China's bid is politically motivated or whether Chinalco, with Alcoa, are after some aluminium assets," says Mr Kernot.
China is by no means alone in fearing a merger of Rio and BHP.
Regulators in South Africa, Canada, the US, the European Union and steelmakers in Japan have all expressed reservations.
"This is going to be a very long process. The EU investigation is likely to be most detailed," Mr Kernot says.
But before regulators can pore over the details, Rio's shareholders must accept the proposed takeover and this is no sure-fire deal.
On Wednesday, Rio Tinto's board rejected the proposal saying it did not reflect the value of the firm but it left the door open to a higher offer.
BHP had sweetened its original informal approach, offering 3.4 of its shares for every Rio Tinto share - better than the previous three-for-one proposal.
This values Rio Tinto at around £54, still short of the £60 per share China was prepared to shell out.
Chinalco and Alcoa said they were "monitoring developments".
No matter what the next move in the saga, who controls the raw materials that form the backbone of the world economy will continue to be a source of concern.