The chairman of China's biggest steelmaker, Shanghai Baosteel, dismissed talk of his company launching a bid for Anglo-Australian mining group Rio Tinto, saying there just wasn't enough money available, the Wall Street Journal reported. "Baosteel lacks the financial wherewithal to take over Rio Tinto," Xu Lejiang was quoted as saying by state media on Thursday. Xu did reveal that Baosteel has reached an agreement with domestic operator Sinosteel over supplies of iron ore and other raw materials. Rio Tinto is subject to a US$130 billion takeover bid by rival mining group BHP Billiton. The initial bid has been rejected, fueling speculation that one or more of China's state-controlled steelmakers, fearful of what a merger between the world's two largest iron ore suppliers would do to prices, could intervene. Given the size of the investment, the management challenges involved and the risk of a political backlash in Australia, a bid from a Chinese consortium is thought unlikely. However, the ongoing rumors could destabilize the BHP bid. It has also been suggested that a Chinese firm might acquire a smaller stake in Rio Tinto and use its shareholder clout to undermine BHP.