Australian Financial Review citing a source it said is close to the talks that an unnamed Chinese group is hoping to rekindle talks with Brazilian iron ore producer Ferrous Resources, potentially standing in the way of a speculated offer from BHP Billiton Ltd BHP -0.12%.

A Belo Horizonte based spokeswoman for Ferrous said the company which is owned by US, UK and Brazilian investment funds is still negotiating for a strategic partnership in its iron ore and port resources. She said the partner may not be named before the year end.

The AFR reported that the Chinese suitor was briefed by advisers after it emerged over the weekend that BHP was considering a USD 3 billion bid for Ferrous. It said talks between the Chinese groups previously suspended partnership talks with Ferrous in mid-July over concerns the Brazilian company needed a USD 3 billion project finance facility to develop its Viga mine and over its failure to secure environmental approvals from local councils.

The unnamed source was quoted as saying "This BHP news has been conveyed to the Chinese company and they will now look to get back into the game."

The source added that neither BHP nor the Chinese group are likely to proceed with an outright bid but may consider a partnership or joint venture.

A spokeswoman for Melbourne-based BHP declined to comment declined to comment on what she said was market speculation.

(Sourced form Australian Financial Review)