In mining, everything is done on a huge scale—including deals.

After months of speculation, BHP Billiton, the world's biggest mining company, confirmed that it had made a merger approach to Rio Tinto, the No. 3 miner, that was rejected.

Shares of Rio Tinto surged as much as 30 percent in London trading.

BHP had offered three of its shares for every Rio Tinto share, valuing the acquisition at roughly $140 billion. That would be one of the biggest deals of all time, topped only by the tech boom deals of the AOL-Time Warner merger and Vodafone's acquisition of Mannesmann.

Rio Tinto said the proposal "significantly undervalues Rio Tinto and its prospects."

BHP said that it had again written to Rio Tinto and "intends to continue to seek an opportunity to meet and discuss its proposal with Rio Tinto."

A merger would have created a behemoth in commodities from copper to coal. It would also create a powerhouse in iron ore, whose demand is surging because of China's push to increase its steelmaking capacity.

Tim Rees, a fund manager with Insight Investment, told Reuters that the merger proposal "shows confidence within the mining industry about the global economy."