HomeEnergy MineralsRio Tinto makes offer for Riversdale Mining

Rio Tinto makes offer for Riversdale Mining

Huge Riversdale
sign almost blocks
the portal at the
Benga project
Sydney, Australia — MININGREVIEW.COM — 06 December 2010 – Rio Tinto Rio Tinto Limited has signalled that it is back on the acquisition trail, after coal miner Riversdale Mining Limited confirmed that the global miner had made an indicative US$3.5 billion takeover offer.

Revealing this development in a letter to the Australian Securities Exchange, Australian-based and listed Riversdale confirmed that Rio Tinto had made a US$15 a share indicative offer.

If successful, it would mark the first major acquisition for Rio Tinto since its ill-timed US$38.1 billion takeover of Alcan in 2007 at the height of the commodities boom.

Rio Tinto was forced to sell many non-core assets and undertake a US$15 billion capital raising to pare back debt after the Alcan purchase. Today investors quickly pushed Riversdale above the mooted takeover price, and the stock closed up 15.67%, or US$2.21, at US$16.31.

Riversdale said it was in confidential talks with Rio Tinto, but wasn’t in a position to submit a proposal for the potential acquisition. “The company has had discussions with Rio Tinto concerning a possible transaction at the corporate level for indicative consideration of US$15 per Riversdale share,” Riversdale said.

While discussions with Rio Tinto were ongoing, there was no certainty that Rio Tinto or any other party would proceed with any proposal for the acquisition of Riversdale, it added.

Riversdale is 22% owned by India’s Tata Steel, which also has a 35% stake in its Benga coal project in Mozambique. Benga is projected to produce 20Mtpa of coal by 2013.
Riversdale owns another major project in Mozambique and controls the Zululand Anthracite operation in South Africa.

Coal prices have soared during the past year, with prices tipped to rise further in 2011, as Chinese growth spurs strong demand for coking coal, used in steel furnaces.

Mine Life senior resources analyst Gavin Wendt said many other major miners, including BHP Billiton Limited, Swiss-based Xstrata, or Brazil’s Vale, could also be interested in Riversdale.