Mining giant BHP Billiton (NYSE: BHP)'s $110 billion offer for Rio Tinto (NYSE: RTP) has been rejected by the latter, with Rio indicating that the all-share offer was too low.

Further, talk on Wall Street Thursday tended to side with BHP making a better offer for Rio, amid chatter that Rio may seek an alternate offer from Brazilian rival, Vale.

BHP's shares fell $2.70 to $77.65 Thursday morning, while Rio's surged $94.70 to $452.20.

Analysts had projected that a BHP/Rio deal could have become the largest acquisition in history. Thursday's offer, however, was not high enough for Rio's directors apparently.

Is Rio worth more?

"It significantly undervalues Rio Tinto and its prospects,'' Rio said in a statement. "The boards have unanimously rejected the proposal as not being in the best interests of shareholders.''

Still, one analyst was prepared to predict an eventual BHP/Rio union, with each company's impressive size driving any potential deal:

"If the name of the game at the moment is resources in the ground, then why [delay] with junior or medium-size miners when you can go to the top?'' Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe in London, told Bloomberg News. "This deal will happen, it's just a question of time.''

Sector Analysis: BHP's overture underscores two mining trends: the secular, ongoing, strong demand for mining products and the drive to create companies with greater economies of scale to meet rising mining demand. Even as housing / residential construction conditions continue to soften in the United States, the construction and infrastructure building boom in emerging markets, particularly in Asia and Latin America, continues. As was the case with the Freeport (NYSE: FCX) / Phelps Dodge merger, the potential BHP / Rio deal is part of a trend to create companies with deeper resource capabilities to meet the likely continued strong demand for mining products for highways, schools, utilities systems, transit systems, facilities, offices, dams, etc. in the developing world in the years ahead.