Yesterday, Rio reported a record-smashing December quarter in iron ore output, with an 11% increase in production over the September quarter.
Iron ore is one of the key commodities in the merger battle between the two giants, with Rio constantly selling its growth prospects in the face of the widely rejected three-for-one proposed offer put on the table by BHP.
BHP has until February 6 to either officially launch a takeover for Rio or walk away for six months.
Austock Securities analyst Tim Gerrard told Dow Jones Newswires that Rio's iron ore business will generate a net profit of $US2.6 billion in the calendar year 2007, compared to $2 billion for BHP.
With Rio's iron ore business outperforming BHP's, much discussion is being generated over whether BHP will put a better offer on the table in its bid to acquire Rio.
Paterson Securities Alex Passmore analyst told MiningNews.net it is a "wait and see" situation.
However, Passmore did say there was definitely a price at which the bid would not go ahead.
"Under the current structure (offer), BHP shareholders end up with about 55 percent of the combined company. So, I think that BHP would not consider taking a minority stake, or less than half in the combined company," Passmore said.
Fat Prophets analyst Gavin Wendt told Mnn BHP was more likely to walk away from the table.
"Irrespective of Rio's quarterly report, yesterday, I think BHP has to up its offer if it is serious about acquiring Rio Tinto. I think the market has made it plainly clear to BHP its current three-for-one offer is not in the ball park."
"BHP's going to have to come up with something closer to four-for-one, if it is going to stand a chance," Wendt said.
"It seems all the indications from BHP is they do not want to raise their offer," Wendt claimed.
"But if they leave the offer where it is, they are not going to be successful," he said.
"Particularly now BHP has been cornered and a time frame has been put on them. I think BHP chief executive Marius Kloppers is going to react rather negatively to that. He does not want to have any constraints put on what he wants to do."
"Kloppers has been using the word "superior" quite a lot when comparing the two companies. I would think the last thing he would want is to be seen as being put into a corner by Rio Tinto and forced to stump up with a bid right now.
"Given the financial turmoil that we are seeing in world equity markets at the moment, I think it is likely we will see BHP walking away for six months and eventually coming back after that."
