Bloomberg quoted two people with knowledge of the matter said BHP Billiton Ltd the world largest mining company is in talks to buy Brazilian iron-ore producer Ferrous Resources Ltd.

One of the people who declined to be identified as the process is private said no final decision has been made on a transaction, which could fetch about 2 billion pounds. Discussions have occurred in Melbourne, where BHP is based, over the past few weeks taking place after negotiations with a Chinese suitor broke down.

One of the people said the Australian miner is examining whether to build a BRL 3.7 billion iron ore project in Brazil, the world’s second largest iron ore exporter which may complement Ferrous’s operations. BHP and rival Rio Tinto Group are tapping new sources of production to feed surging demand in developing nations such as China the biggest consumer of iron ore.

The Sunday Times first reported the possible bid on October 16 without citing anyone. Ms Fiona Martin a Melbourne-based spokeswoman for BHP declined to comment.

Two people with knowledge of the matter said in March Ferrous was in talks with potential strategic investors and lenders to help fund a USD 4 billion expansion.

(Sourced from Bloomberg)