Macarthur Coal rejects takeover bid from New Hope

Coal prices are soaring on demand from the Chinese steel industry

Macarthur Coal has rejected a 3.71bn Australian dollar ($3.44bn; £2.25bn) takeover bid from rival Australian coal firm New Hope.

Macarthur, which has already rejected a takeover approach from Peabody Energy, said the offer "did not represent an adequate premium".

Analysts expect other companies to enter the battle for Macarthur, sparking a full-scale bidding war.

Coal prices have doubled since the beginning of 2009.

China's coal imports have tripled thanks to the recovery in the steel industry - which uses coal - as the global economy recovers from recession.

Macarthur is the world's largest producer of pulverised injection coal - the type used in steel making.

Analysts at Citigroup said they expect mining giant Xstrata and China's Citic Group to enter the bidding race.

Peabody Energy is also still in the running, after it increased the value of its bid earlier this month following its rejected initial offer.