The Daily Telegraph reported on Monday that investment group Blackstone is planning a counter bid for Rio Tinto with a consortium believed to include a Chinese sovereign wealth fund.

The paper in an un sourced article on its Website said that Blackstone is believed to have appointed lawyers for the approach and is in talks with bankers,

The Telegraph said Blackstone believes Rio Tinto's key iron ore operations alone are worth at least USD 110 billion. According to the report, Blackstone was ready to break Rio Tinto up completely, which would include undoing the company's merger with aluminum producer Alcan as well as selling off its iron ore business.

Blackstone has strong links with the Chinese after China Investment Corp, the USD 200 billion sovereign wealth fund, paid USD 3 billion for a 10 percent stake ahead of Blackstone's flotation.

The report is the latest in a series to name parties interested in Rio after BHP Billiton’s 3 for 1 share offer for Rio Tinto, which Rio has rejected. Last week Baosteel, China's biggest steel group, doused speculation it was planning to spoil BHP takeover proposal for Rio Tinto with an offer of its own, saying it lacks the financial muscle.