Don Argus raises the stakes with Rio
BHP Billiton chairman Don Argus issued Rio Tinto shareholders yesterday with a stern warning that their firm’s share price would lower without BHP’s £75bn takeover offer.
Argus said that his group’s bid, which if successful would create the largest miner in the world and would be one of the biggest takeovers of all time, would add “substantial additional” value for investors.
“Without the benefit of our offer, Rio Tinto shares would be trading very differently,” Argus wrote in the letter yesterday to the Australian stock exchange.
“This unique overlap offers substantial opportunities to save money and add value through managing the assets as one collective group under single ownership,” he continued.
A potential deal between the two miners is still a long way off. The European Union competition watchdog has expanded its investigation and has expressed “serious doubts” about a tie-up that would control over a third of the world’s iron ore supplies.
The EU will spend another six months looking at the possible deal.
Yesterday Rio Tinto said it will spend $2.15bn (£1.08bn) to expand production more than six fold at its Corumba iron ore mine in Brazil to capture new markets in Latin America and the Middle East.
The expansion will boost annual capacity at the mine to 12.8m tonnes from around 2m tonnes currently and the new output is due to kick into production in the fourth quarter of 2010.
Rio produces the bulk of its iron ore in Australia and sells it in Asia, but the Brazilian expansion would allow it to expand into Latin America and the Middle East.
