Rio Tinto wins Riversdale board support for $3.9bn bid

City A.M. Reporter
Rio Tinto's $3.9bn (£2.4bn) bid for Africa-focussed coal miner Riversdale was given a boost after a representative of Riversdale's top shareholder Tata Steel backed the offer.

The full board of Riversdale, coveted for its coal projects in Mozambique, recommended the bid saying it was unaware of any other offers in the works, even as an Indian consortium said it planned to decide on 27 January whether to bid.

Riversdale Managing Director Steve Mallyon said his company "had not had one call" from the consortium, called ICVL and made up of an Indian steel maker, iron ore miner and a utility, which may be interested in the coal for its own use.

"I've met a couple of the companies in ICVL (in the past) and I am at a loss to understand the interest," Mallyon said.

Mallyon said negotiations were already underway to sell a large portion of the company's future coking coal to steelmakers in Brazil, Europe and possibly China and talks were in a late stage to tie up the company's thermal coal output with a major commodities trading house, leaving little for Indian buyers.

"So we've only got about 10 million tonnes of coking coal to play with for a number of years and that's not a lot to play with," Mallyon said. "This does not seem to be the type of tonnes the Indians would be seeking."

Tata Steel has already signed a supply agreement for 40 per cent of the production from Riversdale's main Benga mine, scheduled to start up this year.

No superior proposal to Rio Tinto's offer had been received, Riversdale said in a statement after releasing its official response to Rio Tinto's bid, adding the company was not aware of any party having an intention to make such a proposal.