Friday, October 8, 2010

"Rio Tinto keen on re-entering potash sector" (RTP; MOS; POT; IPI; BHP)

Very big moves in ag today.
From Reuters:
Miner Rio Tinto is interested in possible bolt-on acquisitions in a range of sectors, including potash, an executive said on Thursday.

The sector has been in the spotlight since BHP Billiton
launched a hostile bid in August for the world's largest fertilizer producer, Canada's Potash Corp.
Analysts have quoted Rio Chief Executive Tom Albanese as saying he was interested in expanding in the fertilizer business, but the firm had made no public statements on the issue.

"Our chief executive has made no secret of the fact that he believes that the potash sector is an attractive one; it meets Rio Tinto's long term objectives of a significant sector with good long-term fundamentals," said Harry Kenyon-Slaney, chief executive of Rio's minerals and diamond division.
Rio Tinto already has modest exposure to the agriculture sector since it is a major player in borate, an industrial mineral used as a crop nutrient, among other uses.

"If you look at all the industrial minerals commodities, there are many of them, and we constantly look at opportunities across the whole periodic table. Now we recognize that potash is an attractive one, but so is titanium dioxide, so are diamonds, so are borates," he said in an interview ahead of LME Week.
"As always, we're looking for opportunities. They're likely to be bolt-on acquisitions. I think the media has described that in terms of $5-$10 billion transactions. Certainly I think that's consistent with what the chief executive and CFO have said."

Rio had been developing potash projects, but sold them during the downturn as it sought to raise cash to pay off a heavy debt burden....MORE
That is hedge fund or arrogant pension fund behavior. CalPERS did the same thing in 2008-09, sell your liquid holdings to shore up the  illiquid stuff you bagged yourself in.