London-based mining group Anglo American has rejected a merger bid by Xstrata, calling the terms of the proposed deal totally unacceptable.
Anglo says the proposals - which would have created a group worth more than Stg 40 billion, lacked strategic merit.
Xstrata says it believes a merger would significantly enhance shareholder returns.
A merger would help the companies compete against Rio Tinto and BHP Billiton, which agreed a joint venture recently.
That deal was struck after Rio scrapped a planned link with Chinalco, a state-controlled Chinese company.