Saturday, November 10, 2007

BHP-Rio Tinto (RTP) China Soverign Wealth Fund? Russia?

It's pure speculation but it would be a masterstroke diversification out of the dollar into iron ore!
The two posts immediately below imply BHP would have $110 Billion cash to fend off an all cash bidder like a SWF.

From the Scotsman:

...The City was awash with rumours that BHP was prepared to run a lengthy campaign despite the immediate rejection, with talk that it may sweeten the deal with up to 500p cash per share, on top of the previous offer of three of its own shares.

Bankers also speculated that Chinese resource firms may attempt to form a partnership with BHP, in a bid to gain access to extra iron resources as it struggles to cope with demand from the country's fast industrialising economy.

The attraction of a partnership would be regulatory - Australian authorities are unlikely to endorse a foreign takeover of a major natural resource handler....MORE

From the Telegraph:
Business comment: China looks to Rio

BHP Billiton's approach to Rio Tinto to create a $350bn mining giant has got the attention of Beijing's Communist government. Our news today that the China State Development Bank has taken a stake in Rio is the clearest sign yet that China is not going to sit on the sidelines of what promises to be a battle royal for control over some of the most lucrative assets the world holds. The stake may be small and right now no one - perhaps not even the Chinese - knows what the endgame will be. Whatever it is, China has put a marker down.

  • China leads race for world’s riches
  • BHP sticks its ore in
  • China bank builds stake in Rio
  • It should be no surprise. Steel is a cornerstone of the Chinese economy and has an iconic status in the country that goes far beyond its role in the industrialisation of the country. It already buys 20 per cent of BHP's output and in iron ore, the main feedstock for steel, the country is close to consuming 50 per cent of the world's production. No wonder its appetite for resources - in Africa, Latin America and other parts of Asia - is huge....MORE

    UPDATE: From RTTNews:
    ...The two companies jointly own the Escondida copper mine in Chile and run iron ore operations in Western Australia. A second person close to Rio said market rumors of rival bids were misguided. "There is no concept of trying to find a white knight."

    Rio chief executive Tom Albanese visited China this week, fuelling speculation he was courting Chinese investors for a friendly deal to help fend off BHP. But the person close to the company said Albanese had planned his trip earlier to the BHP offer....