BHP Billiton is considering its options regarding WMC Resources

The Anglo-Australian firm said it would hold talks with WMC on Tuesday about potentially making a cash bid.

Were it to proceed, BHP would go head to head with Swiss firm Xstrata which has tabled a Australian $8.2bn ($6.5bn) hostile offer for WMC.

WMC is a leading global producer of uranium and nickel.

Discussions

"BHP Billiton will today seek discussions with the board of WMC Resources regarding the possibility of making an all cash offer for the entire issued share capital of WMC Resources," the firm said in a statement to the Australian stock market.

BHP had earlier appointed investment firm Deutsche Bank to advise it on potentially buying a stake in WMC.

It said that it had opted not to buy any shares at this time but held options over shares worth 4.3%.

Things could be hotting up Gavin van der Wath, Allianz Dresdner Asset Management

WMC rejected Xstrata's offer earlier this year, forcing the firm to mount a hostile bid.

WMC shareholders have until 24 March to decide whether to accept or turn down the bid.

Analysts said they believed that BHP may price any offer at Aus $9.2bn, therefore trumping Xstrata's bid.

"Things could be hotting up," Gavin van der Wath, an analyst with Allianz Dresdner Asset Management, told Reuters news agency.