Rio to splash $3.5bn on bid

 
City A.M. Reporter
MINER Rio Tinto yesterday made a $3.5bn (£2.2bn) bid approach for Africa-focused Riversdale Mining, sending the target firm’s shares surging 16 per cent 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 five to ten per cent 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.

Tata said it regarded its Riversdale stake as a strategic investment. “Tata Steel will continue to monitor the situation and will take appropriate action as deemed necessary,” the company said.

Xstrata, Anglo American and Peabody Energy could also be interested. Top coking-coal exporter BHP Billiton is seen as a less likely contender, as it has its own growth options in Australia.