Xstrata says Falconbridge would be a "natural partner"

Xstrata is offering C$16.1bn ($14.bn; �7.7bn) for the 80% of Falconbridge it currently does not own, valuing the nickel miner at C$20bn in total.

The rival offer from Inoc, itself also a Canadian mining company, values Falconbridge at C$19bn.

The bid fight comes at a time of record global metal prices.

Driven by strong demand, metals such as nickel and copper have seen their prices soar since the start of the year.

'Powerful offer'

Xstrata said a successful deal would add nickel to its existing copper, coal, zinc and chrome operations.

"This is a very full offer. It's a powerful offer," said Xstrata chief executive Mick Davis.

He added that Falconbridge would be a "natural partner" for the company.

Based in Zug, Switzerland, Xstrata's shares are listed on both the Swiss and London stock markets.

Its UK shares were down 1.24% to �20.75p in mid-afternoon trading in London.

Inco, the world's second-largest nickel miner, first made its approach for Falconbridge last autumn.

However, Inco's bid has since been complicated by the fact it is now itself a takeover target.