Rio Tinto Ltd.'s (RIO) raised US$4.0 billion bid for Riversdale Mining Ltd. (RIV.AU) represents the quickest and cheapest way to develop the miner's coking coal assets and get raw materials to its steelmaker shareholders in the short term, according to the target's managing director, Steve Mallyon.

In an interview Thursday with Dow Jones Newswires, Mallyon said other options would likely force the Mozambique-focused miner to raise money from debt or equity markets, potentially diluting the return on stakes in the company held by India's Tata Steel Ltd. (500470.BY) and Brazil's Cia. Siderurgica Nacional (SID).

"We can follow the Fortescue Metals Group Ltd. (FMG.AU) model and go to the debt markets--we don't have a concern about that--but this offers an opportunity to take money off the table now rather than later," he said.

Fortescue has grown to be the world's fourth-largest iron ore miner in three years thanks to heavy borrowing before the global financial crisis.

Earlier Thursday, Rio Tinto upped its offer for Riversdale to A$16.50 from A$16 a share. The bid has seen lackluster take-up from shareholders since it was announced, and Tata and CSN's combined 47% stake would force Rio to win the approval of nearly all Riversdale's other shareholders if the two steelmakers refuse to sign on to the deal.

-By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com
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