RIV Riversdale Fpo

Rio Tinto PLC (RIO) said Wednesday its interest in Riversdale Mining Ltd. (RIV.AU) has risen to 46.78%, marginally shy of the target it set itself for effective control of the Africa-focused coal producer ahead of a late-day deadline.

The Anglo-Australian mining company has offered A$16.50 a share, which would value Riversdale at almost A$4 billion, provided it has acceptances for more than 47% of the shares by Wednesday evening. This threshold would give Rio Tinto a stake greater than that of the next two largest shareholders together, and Rio has said that if it fails to reach this level the offer price reverts to A$16 a share.

The deadline for the offer has been extended four times since it was first made in December, and was last week declared unconditional after Rio failed to secure a more than 50% stake in Riversdale as it had previously planned. An outright takeover has been frustrated by steel producers Tata Steel Ltd. (500470.BY) of India and Cia. Siderurgica Nacional (SID) of Brazil, which increased their investments in Riversdale since the offer was made.

Rio's interest is in Riversdale's two major developing coking coal projects in an area of Mozambique believed by some companies to be home to a massive deposit of high-quality coal that may rival Australia's Bowen Basin in Queensland. Coking coal is a key raw ingredient in making steel.

Officers at Brazil's CSN last week said the company intends to keep its 19.9% investment in Riversdale as a "hedge" to cover part of its own coking coal needs. Tata, in addition to its 27.1% shareholding, has signed an agreement for 40% of the coal produced by Riversdale's Benga mine, which is scheduled to begin production this year, and has a director on Riversdale's board who accepted Rio's bid.

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

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