LONDON - Fresh speculation has swirled about mining giant BHP Billiton resurrecting a takeover bid for rival Rio Tinto, but such a move is unlikely before Rio repairs its balance sheet.

BHP, which has the most robust balance sheet among major rivals, has previously said it was shopping for acquisitions to take advantage of low prices amid the downturn.

But a move to revive a Rio bid four months after scrapping it would make little sense right now, said analysts, industry sources and fund managers.

The world's largest mining company is probably sizing up other possible takeovers in areas such as potash and petroleum.

BHP is not going to go through this saga again now because they don't need to, the tables have turned, said a hedge fund manager who declined to be named. Let Rio deal with the balance sheet first, and then come back and take them.

BHP abandoned a hostile all-share bid in November, worth $66 billion at the time, citing Rio's heavy $39 billion debt load and the dire financial markets.

Little has changed on those two issues since then.

Rio has inked a $19.5 billion deal with Chinese state-owned Chinalco which would slash its debt load in half, but opposition is bubbling among large shareholders and Australian politicians.

Australia's government is not due to make a decision until June, after which shareholders will get a chance to vote.

Both BHP and Rio declined to comment on the speculation.

I'm sure they (BHP) are looking hard at Rio's portfolio and they're probably prepared to buy assets from Rio, said analyst Nick Hatch at ING.

There are also lots of other assets out there and companies that are having problems financing them, so I really don't see them taking on a huge, huge amount of debt with Rio.

POTASH, PETROLEUM TAKEOVERS?

UK takeover regulations ban BHP from making another hostile bid for Rio for 12 months after dropping the offer.

A new deal approved by Rio's board would be allowed, but BHP would have to be careful not to violate the anti-siege aspect of the regulations that allow the target company respite from unwelcome advances for a year after a suitor drops a bid.

Rio's Chinalco agreement bans it from soliciting competing bids, but the firm would have to consider any serious proposals.

The Rio board, however, would find it awkward accepting a new BHP bid -- which would surely be at a lower level -- after spending a year rejecting the initial one as lacking value.

A move by BHP last week to raise over $6 billion in bonds helped fuel the speculation about a fresh Rio approach, but BHP has plenty of other potential ways of spending cash, including its own heavy pipeline of expansion projects.

Short of a full takeover, one possibility is a joint venture between the two in iron ore in Australia's key Pilbara region, the area BHP cited as having the most synergies when it was campaigning for its offer last year.

Analyst Sylvain Brunet of Exane BNP Paribas said BHP is likely to move to a net cash stance of $8 billion by June.

We believe that BHP Billiton has the freedom to consider a full range of options, from oil and gas assets to potash even, he said.

BHP already is planning to build the world's biggest mine for potash, a key component in fertilizer, amid booming demand.

JPMorgan said in a recent note that BHP could be looking at either Potash Corp of Saskatchewan Inc (POT.TO) or the Mosaic Company (MOS.N).

BHP may also be looking at petroleum assets, but would find stiff competition, Bank of American/Merrill Lynch analyst Olivia Ker said in a note. Oil majors which are also likely to be attracted to potential acquisition opportunities have similar if not greater funding capacity.

BHP has said that it was only considering acquisitions of so-called Tier 1 assets -- huge, top quality resources with low costs.

People can be very impatient to see a deal but sometimes it can take some time to conclude one, said an industry source who declined to be named, referring to BHP's takeover hunt.

If BHP chooses to revive a full bid for Rio, it would wait until after an outcome was clear on the Chinalco deal and it might hold off until November, when it would no longer be tied down by the UK takeover rules, the hedge fund manager said.

BHP clearly wants to do a (Rio) deal, there is no doubt in my mind that BHP would eventually like to do the deal, he said.

The synergies as a percentage of their respective market caps are so much greater now. The synergies have not gone down, but their market caps have collapsed.

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