Mining firm Rio Tinto has rejected a $147bn (£74.8bn) takeover offer from rival BHP Billiton.
Rio has been resisting BHP plans for a takeover
A tie-up between BHP and Rio would create a firm with a third of the world's iron-ore market, raising fears that it would be too powerful.
Last week, global metals companies Alcoa and Chinalco bought a 9% stake in Rio for $14bn, in a move analysts said was aimed at blocking a BHP takeover.
Rio had previously said an informal bid from BHP undervalued the company.
"BHP Billiton's offers, while improved, still fail to recognise the underlying value of Rio Tinto's quality assets and prospects," Rio Tinto's chairman Paul Skinner said.
BBC's business editor Robert Peston says that it was almost "impossible for Rio's board to do anything but reject BHP Billiton's £75bn takeover offer" after last week's raid by China on shares in Rio Tinto.
China's state-run metals giant Aluminium Corp, or Chinalco, teamed up with US firm Alcoa on Friday to buy a 9% stake in Rio's London listed shares for $60 a share - 11% greater than the value of the all-share offer proposed by BHP.
Rio would have looked pretty foolish if it had accepted an offer below what Chinalco would have to pay - under takeover rules - were it to make a formal takeover, says our correspondent.
Or to put it another way, an arm of the Chinese state has done a decent job of frustrating the ambitions of one of the stars of the capitalist corporate firmament, BHP, he says.
Despite rejecting the offer, Rio left the door open for a higher bid.
"Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto," Mr Skinner said.
BHP's bid for Rio offered 3.4 of its shares for every Rio stock.
This was higher than its previous informal three-for-one proposal, worth $130bn, that was first announced in December of last year.
However, BHP had warned Rio that it was not willing to sweeten its offer any further.
BHP chief executive Marius Kloppers insisted that his company will not return with a more generous deal, saying the formal bid "is our first and only offer".
US aluminium producer Alcoa and China's state-run Chinalco have said they are "monitoring developments" following BHP's bid for Rio Tinto.
Earlier on Wednesday they said: "As shareholders in Rio Tinto, we believe any offer should reflect the fundamental value of the company."
Alcoa and Chinalco said last week that while they did not intend to make an offer for the whole of Rio Tinto, they reserved the right to do so if Rio received a firm bid from a third party.
The two companies are said to be concerned that a combined BHP and Rio would have too much control over global metal ore prices.
"Why does BHP really want to tempt the dragon? Chinalco has already made the message clear: they really do not want to see a merger," said Geoffrey Cheng, director of equity research at Daiwa Institute of Research.
"You're not going against a corporation. You're going against a nation."