Mumbai: BHP Billiton Plc, the world''s biggest miner, is in talks with private equity firms for a possible $40 billion joint bid for US aluminum company Alcoa Inc, newspaper reports said.

Citing unnamed sources close to the company, UK newspaper The Times said BHP''s favored partner was the Blackstone Group.

BHP had appointed investment bank Merrill Lynch to work on a possible bid for Canada''s Alcan Inc, for which Alco has made a $28.7 billion hostile bid.

Alcoa, The Times said, was BHP''s preferred target, but it was unwilling to pay a premium for assets that it does not want to retain and so wanted to team up with a bid partner.

BHP, analysts said, which a record A$13.6 billion after tax profit in fiscal 2007, could probably manage the funding of a takeover of Alcoa Inc. and Alcoa''s 60 per cent-owned Alumina Ltd. of Australia.

With strong revenues from its oil and gas assets in Europe, Australia and the Gulf of Mexico, analysts expect BHP to have enough cash to pay for its share of a joint bid with Blackstone.

Another potential Alcoa bidder, Rio Tinto Plc., is seen as more likely to employ scrip to avert a potential liquidity crunch.

Rio has refused to comment on media reports it had hired Credit Suisse and JP Morgan to explore potential acquisition targets in mining.

A takeover of Alcoa would be among the biggest deals in the sector this year, and would dwarf BHP''s $7 billion-plus acquisition of WMC Resources in 2005.

Rio Tinto, which produces nearly one million tonnes of aluminum from its Comalco smelters in Australia and New Zealand, last week said it would spend $1.8 billion expanding alumina-refining capacity in Australia.

It also is helping fund plans to build a giant smelter in Abu Dhabi in the United Arab Emirates.

Both BHP and Rio are believed to be interested in selling Alcoa or Alcan''s downstream assets to private equity.

Apart from Blackstone, which counts former Alcoa chief executive Paul O''Neil as an adviser, sources have suggested TPG Capital and Apollo Asset Management might also be interested in the downstream assets.

Alcoa, meanwhile, extended its offer by another month, to August 10, as it seeks approvals from competition regulators around the world.

The Australian Competition and Consumer Commission has already received a submission from Alcoa. Submissions from other interested parties are due this Friday, and the ACCC expects to announce its findings on August 15.

Alcoa also reported second-quarter earnings of $716 million, down from $744 million during the same period last year.

Profits from its alumina division rose to $(US)276 million - $16 million higher than the previous quarter - due to higher overall prices and shipments, even though the earnings were partially offset by a rising Australian dollar.