UPDATE: Rio Tinto Upgrades Riversdale Stake, Buying CSN's Holding
20 April 2011 - 10:44AM
Dow Jones News
Rio Tinto PLC (RIO) has extended its control of Riversdale
Mining Ltd. (RIV.AU) and with it access to a promising coking coal
asset in southern Africa, buying shares from Brazilian steel
producer Cia. Siderurgica Nacional (SID) to take its interest above
72%.
CSN and Tata Steel Ltd. (500470.BY) of India both increased
their investments in Sydney-based Riversdale after Rio first made a
takeover bid last December, frustrating any attempt to close the
deal quickly and prompting Rio to raise the offer price and extend
the deadline several times.
Rio said Wednesday that CSN had now accepted the offer, which
values Riversdale at almost $4 billion, and would tender its entire
19.4% stake. The offer was due to close Wednesday, but has now been
extended nine days to April 29.
Rapid industrialization in Asia, particularly China and India,
has driven demand for undeveloped deposits of coking coal and other
minerals essential in manufacturing steel. Riversdale has
identified a 13 billion metric ton resource in an area of
Mozambique attracting the attention of mining and steel companies
on the promise it could rival Australia's coal-rich Bowen Basin in
Queensland state.
Rio earlier this month secured enough acceptances for its cash
offer of 16.50 Australian dollars ($17.50) a share to grab a stake
greater than the 47% held between CSN and Tata.
H.M. Nerurkar, managing director of Tata, in a recent interview
said the company hadn't yet begun talking to Rio about the future
direction of Riversdale but it was willing to cooperate. Tata has a
27.1% holding in Riversdale and a seat on the coal company's board,
as well as an agreement to buy 40% of the coal produced by
Riversdale's Benga mine that is scheduled to begin production this
year.
Rio is one of the leading suppliers of coking and thermal coal
to the Asian seaborne market, with all but one of its mines in
Australia. Mozambique is positioned to export coal direct to
countries including China and India, once key infrastructure
including rail links and a port are built.
Riversdale's Benga project in Tete province is the more advanced
of two ongoing projects in Mozambique, and Rio has said it will
accelerate its development as well as further exploration efforts.
Rio has already named three directors to Riversdale's board.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
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