Companhia Siderurgica Nacional (SID) has raised its stake in Mozambique-focused coking coal developer Riversdale Mining Ltd. (RIV.AU) by 1.3%, the Brazilian steelmaker said Wednesday, potentially complicating a US$3.9 billion offer for the company by Rio Tinto Plc (RIO).

The move raises a hurdle for Rio Tinto in its first major acquisition attempt since the global financial crisis and adds to mergers and acquisitions excitement surrounding coking coal miners, amidst an expected pickup in demand for steelmaking materials as the world economy rebounds.

In a regulatory statement, CSN said its holding in Riversdale was 17.58% at Feb. 8, up from 16.29% at Nov. 24.

Rio Tinto has offered A$16 cash per share for Riversdale, which has a 14 billion-metric-ton coal resource in north-western Mozambique. Since the start of February, the Brazilian company has spent A$76.2 million at an average cost of A$15.96 per share buying 4.8 million Riversdale shares, with roughly half of the holding bought at Rio's offer price.

"If you're buying stock close to the bid price, it's a clear signal that you're not going to accept the bid," said Hayden Bairstow, an analyst at CLSA in Sydney.

Another Sydney-based analyst, who is not authorized to speak to the media and so asked not to be named, said: "I think they are signalling that there is someone else out there who may bid."

However, Riversdale's shares on Wednesday fell to their lowest level since Rio first announced talks with the company on Dec. 6 down 26 cents or 1.6% to A$15.74 at 0215 GMT, after 4.4 million shares were traded at A$16 for A$70.2 million around 0038 GMT.

Riversdale shares had only dipped below Rio's A$16 offer price to a low of A$15.80 on two brief occasions since the two companies admitted they were in talks in early December, with the stock rising as high as A$17.14 on Dec. 30.

Market participants have keenly watched the progress of Rio's bid for Riversdale. It is Rio's first major takeover attempt since its US$44 billion acquisition of Alcan Inc. in 2007, a deal which saddled the company with debt as the global financial crisis was starting to break.

It is also occurring against a backdrop of booming interest in coking coal assets. Supplies of the commodity, used in steelmaking blast furnaces, are expected to be sharply constrained as demand for steel from emerging economies booms over the next decade.

Mozambique is anticipated to be one of the biggest growth regions for exports of premium hard coking coal, which is currently dominated by mines in Australia's Queensland state that have been hard-hit by heavy rains over the past few months.

Alpha Natural Resources Inc. (ANR) last month offered US$7.1 billion to buy Massey Energy Co. (MEE), a miner with significant coking coal assets in the U.S. Appalachian mountains.

Bairstow said that CSN may be attempting to use its holding in Riversdale as a bargaining chip to ensure access to Riversdale's coal production. Unlike Tata Steel Ltd. (500470.BY), Riversdale's largest shareholder, CSN does not have a deal guaranteeing supply from Riversdale, and could suffer if the company is subsumed into a major diversified miner.

"CSN doesn't have an offtake agreement for any of the coal, which is a strange position to be in," Bairstow said.

CSN is unlikely to be in a position to block a bid for Riversdale, as Rio has said it would be happy with a majority stake, in line with its controlling investments in Energy Resources of Australia Ltd. (ERA.AU) and Coal & Allied Industries Ltd. (CNA.AU).

However, the threat of bids above Rio's offer price may encourage the company to offer concessions to major shareholders, Bairstow said.

A spokesman for Riversdale said he knew nothing about CSN's move, while spokespeople for CSN and Rio Tinto did not immediately return requests for comment.

-By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com
Coal & Allied Industries (ASX:CNA)
Historical Stock Chart
Von Mai 2024 bis Jun 2024 Click Here for more Coal & Allied Industries Charts.
Coal & Allied Industries (ASX:CNA)
Historical Stock Chart
Von Jun 2023 bis Jun 2024 Click Here for more Coal & Allied Industries Charts.