Rio Tinto ready to buy Riversdale
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Rio Tinto is ready to make a 3.8 billion Australian dollars (3.79 billion U.S. dollars) takeover bid for coal mining firm Riversdale Mining to increase coal production, local media reported on Wednesday. According to The Australian, Rio is understood to have bid about 16 Australian dollars a share for Riversdale, boosting a previous 15 Australian dollars per share proposal.
Riversdale said that it was requesting a trading halt in the stock exchange, "pending an announcement about a possible control transaction".
Both Riversdale and Rio Tinto refused to disclose anything on the proposal until the final documents were exchanged.
Riversdale has two big coking coal projects in Mozambique, which is likely to become the second-biggest coking coal exporter after Australia in the next 15 years. The two projects are Benga and the much bigger Zambeze project.
Riversdale said Benga is expected to produce 6 million tons a year of coking coal, along with thermal coal, out of a total of 20 million tons a year of unprocessed coal. Zambeze has the potential to eventually produce about 90 million tons per year of coal. This would include about 27 million tons per year of coking coal if it produces at similar ratios to Benga.
If Riversdale would be added to Rio's current coking coal production of 7.5 million tons per year, Rio would become a big player in export coking coal. BHP Billiton, with about 60 million tons per year, is the world's biggest producer.
