BHP Billiton denies talks on China equity alliance

By Sonali Paul and Victoria Thieberger

MELBOURNE (Reuters) - BHP Billiton (BHP.AX) (BLT.L), the world's top miner, on Thursday denied recent speculation it had held talks with potential Chinese investors about forging an equity alliance with its most important emerging market.

"We have not spoken to anybody," Chief Executive Marius Kloppers said when asked about an Australian media report last month that a Chinese firm wanted to make an investment in BHP Billiton.

BHP Billiton has prompted concerns in China with its $170 billion (87 billion pound), hostile bid for nearest rival Rio Tinto (RIO.AX)(RIO.L). A takeover could substantially raise BHP's pricing power.

Kloppers was speaking to reporters after giving a speech that outlined the company's growth potential and sought to counter Rio Tinto's arguments against the bid proceeding.

Rio Tinto in February rejected BHP's offer of 3.4 BHP Billiton shares for each Rio share as too low. It has repeatedly said BHP needs Rio more than Rio needs BHP Billiton.

BHP is targeting 6.9 percent annual production growth over the next five years, lower than Rio's forecast for 8.6 percent until 2015, but Kloppers said BHP's growth would come from some of its highest-margin businesses and projects with lower risk because they involved expansions of existing mines.

"Much of our growth is focused on the highest margin businesses in which we have a clear advantage," Kloppers said.

Petroleum was BHP's most profitable business in 2007, with a margin of 75 percent. Iron ore had a profit margin of 52 percent.