Anglo-Australian miner Rio Tinto made a $3,5 billion bid approach for Africa-focused Riversdale Mining, sending the target firm’s shares surging 16% and setting up a potential takeover battle.
Rio’s move on Australia’s Riversdale is likely to spark a bidding war, as the company has hard coking-coal projects in Mozambique that could eventually supply 5-10% of the global market for the key steel-making material.
Brazil’s Vale is seen by some analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique. India’s Tata Steel, Riversdale’s top shareholder, was also seen as a potential bidder.
Top coking-coal exporter BHP Billiton is seen as a less likely contender, as it has its own growth options in Australia.
Xstrata and Anglo declined to comment. The company’s fourth-biggest shareholder, Australian investment firm LinQ Management, expects Riversdale to be hotly contested, given the scarcity of good quality coking-coal assets and booming demand from China and India for the commodity.
“It’s in a good part of the world for accessibility, and we think there’s plenty of further upside for whoever’s interested in buying it. Hopefully there will be other interested suitors coming to the table,” LinQ managing director Clive Donner said. —Reuters