BHP Billiton has moved to hose down speculation that it will bid...

BHP Billiton has moved to hose down speculation that it will bid for OZ Minerals, saying it does not view OZ's flagship Prominent Hill mine as a top-tier mining asset.

The freshly started Prominent Hill copper and gold mine is close to BHP's Olympic Dam operations in South Australia and will be OZ's sole asset once shareholders approve a $US1.2 billion ($1.6 billion) sale of other assets to China Minmetals.

Many market-watchers have speculated that BHP, which has raised cash in the US bond market and talked up its buying power in a low-price environment, would make a move on OZ.

However, BHP's newly installed uranium boss, Dean Dalla Valle -- who is in charge of Olympic Dam -- has played down the speculation.

When asked recently about BHP's intentions toward OZ, he declined to comment on a takeover, but indicated Prominent Hill was not of interest.

Mr Dalla Vale said the mine was not seen as a tier-one asset, indicating it was not big enough for BHP. The comment came after OZ was given an extension on finance commitments that would see it through its Minmetals deal without assets being forced into a firesale by banks.

BHP consistently refers to its assets and any it would be interested in buying as tier-one.

Stating Prominent Hill does not rate in this category would be designed to give the impression it was not interested, and take the heat out of heavy speculation that BHP would make a move.

In February, chief executive Marius Kloppers said the global slowdown had produced no change in BHP's strategy, other than that to increase its focus on tier-one assets and brownfield expansions.

A delay in BHP's huge Olympic Dam expansion plans, and the fact BHP has bought ore from Prominent Hill, had increased speculation that a bid was in the pipeline.

Processing of concentrate from Prominent Hill was seen as a potential way for BHP to boost output from its Olympic Dam plant, which has not been running at full capacity.

Olympic Dam has been an early customer of ore from Prominent Hill, which recently exported its first ore from Darwin.

Prominent Hill, which is forecast to cost $1.15 billion, is expected to produce 85,000-95,000 tonnes of copper and 55,000-65,000 ounces of gold this year.

Olympic Dam, by comparison, has capacity of 235,000 tonnes of copper and 100,000 ounces of gold.

BHP has plans to eventually lift this to 750,000 ounces of copper and 800,000 ounces of gold over coming decades.

OZ said yesterday that Prominent Hill had been achieving the throughput rates designed for it. "There are many indications that the overall processing operation could well go beyond its design capacity as long as we can keep the ore feed up to it," OZ's executive general manager of project and technical services John Nitschke told a conference in Adelaide.

OZ would not comment on Mr Della Valle's statement.