Riversdale Mining Ltd.'s (RIV.AU) largest shareholder has lifted its stake in the Africa-focused coal company, ensuring it and the next-largest shareholder have a strong say in Rio Tinto PLC's (RIO) proposed 3.9 billion Australian dollar ($3.94 billion) takeover.

The creeping investment by India's Tata Steel Ltd. (500470.BY), which together with Brazilian steelmaker Cia. Siderurgica Nacional (SID) now own a 47% voting stake in Riversdale, suggests a slow take-up for Rio Tinto's offer. The Anglo-Australian mining company has twice extended the deadline for its bid, last week moving it to March 18.

People familiar with the offer said it is likely Tata and CSN are ensuring they play a key role in the takeover discussions and may even be pushing for an improvement on the A$16 a share offered by Rio Tinto.

In a letter to Riversdale, released to the Australian securities exchange Wednesday, Tata said it had raised its stake in the company 2.9 percentage points to 27.1%. CSN has also raised its stake, in February taking it to 19.9%. Rio Tinto Tuesday said its interest in Riversdale and acceptances for its offer had risen to 16.9% from 15.9% in mid-February.

Rio Tinto has said its bid is subject to it securing more than 50% of Riversdale's shares. Riversdale has said its directors have all recommended Rio Tinto's offer "in the absence of a superior proposal," although N.K. Misra had given his okay for the tie-up only as a nominee director of Riversdale and not as head of mergers and acquisitions at Tata.

Tata last week said it hadn't made a decision on its stake in Riversdale, and a spokesman Wednesday declined to comment other than to say the holding was considered strategic by the steel company. A spokesman for Riversdale declined to comment, and spokesmen for Rio Tinto in Melbourne weren't immediately available when contacted.

The interest shown in Riversdale, which has a coal mine in South Africa and is developing two major coal projects in neighboring Mozambique, highlights global appetite for the fuel. Tata has a 35% stake in Riversdale's Benga project, ensuring coal supplies for its steel operations, and Wuhan Iron & Steel Co. (600005.SH) last year agreed to buy a 40% interest in its Zambeze project for a similar percentage of coking coal produced.

Tata and CSN are now forbidden by Australian listing rules from raising their stakes further for six months without launching a formal offer. At 0305 GMT, Riversdale's shares were trading 3.2% lower at A$15.00, outpacing a decline in the wider market.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

--David Fickling in Sydney contributed to this article.
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