Shares in miner Rio Tinto have risen on speculation that steel magnate Lakshmi Mittal could buy a stake.
The Financial Times said that the boss of Arcelor Mittal is keen to secure supplies of iron ore - a key ingredient in making steel.
Rio Tinto, a key producer of the raw material, is the target of a $147bn (£73.7bn) hostile bid by BHP Billiton.
Steel makers fear that a merged group would have too much control over the supply and price of iron ore.
Rio Tinto shares rose as much as 2.5% and were trading at 5,954 pence, up 111p, or 1.9% in mid-morning London trade.
Rio's shares are also listed in Australia, where they rose.
Steel firm manoeuvres
The Financial Times report suggested that Arcelor Mittal, the world's largest steel maker, could afford to match the 9% stake bought earlier this year by China's state-owned aluminium group Chinalco together with US firm Alcoa.
Analysts told the newspaper that Mr Mittal may wait and buy iron ore assets from Rio at a later date should regulators demand the miner sells part of its business to allow a merger with BHP to go ahead.
The report came as Wall Street bank Goldman Sachs announced that Mr Mittal had joined the firm's board as an independent director.
Arcelor Mittal has been active in making sure its steel mills are well supplied.
At the weekend, the group said it had raised its stake in Australia's Macarthur Coal, which supplies steel mills with more than a third of the world's pulverised coal, to 19.9% from 14.9%.
But possible plans for a takeover bid could be scuppered by South Korean steel firm Posco - the world's fourth largest - after it paid $404m for a 10% stake in Macarthur shortly after.
Steel makers have been forced to take steps to protect themselves against painful raw material cost increases mainly due to surging demand from Asia's tiger economies, including China, to power their growth.