Strong demand for commodities has driven prices up

Blackstone is creating a consortium, thought to include a Chinese sovereign wealth fund, to make the bid, it said.

Rio has already dismissed a hostile takeover approach of about $130bn (�63.2bn) from BHP Billion as too low.

Blackstone plans to break up the business, selling off different parts of the mining firm, the paper says.

This would involve undoing a merger completed earlier this year with aluminium maker Alcan, it added.

China links

In a bid to defend itself against BHP's unwanted offer, Anglo-Australian firm Rio has already said it will look to boost shareholder value by selling off $30bn-worth of its business, including two uranium projects in Australia and a zinc, lead and silver mine in the US.

Analysts say that Rio's refusal to team up with BHP is indicative of its conviction that mineral and metal prices will stay high for years to come, fuelled by strong demand from emerging economies such as China and India.

Blackstone, which declined to comment on the report, has been developing strong links with Chinese investors.

China Investment Corp paid about $3bn for a 10% stake in the private equity firm ahead of its flotation this year.