Rio Tinto bids to take over Riversdale

Rio Tinto Group, the world's third-largest mining company, has made a A$3.5 billion ($4.53 billion) takeover proposal for Riversdale Mining, which is developing coal mines in Africa.

Rio offered A$15 for each of its shares, Sydney-based Riversdale said yesterday.

Rio joins Brazil's Vale, China Shenhua Energy and Anglo American in seeking coal assets in developing nations after Chinese imports surged fivefold last year.

Riversdale is developing mines in Mozambique and is spending at least A$400 million on the Benga mine.

"Riversdale has very large resources in Mozambique," said Grant Craighead, managing director of research company Stock Resource.

"The challenge for Rio is finding assets big enough to make a material difference to the company and this fits that criteria."

Rio is considering small-to-medium sized acquisitions, chief executive Tom Albanese said.

Rio would need to win the support of Riversdale's major shareholders, including Tata Steel, which holds a 24.16 per cent stake.

Riversdale's Benga project, 35 per cent owned by Tata, in Mozambique, may produce about 1.7 million metric tonnes of coking coal and 300,000 tonnes of thermal coal with first exports expected in the second half of next year, according to the company's website.

"While discussions with Rio Tinto are ongoing there is no certainty that Rio Tinto or any other party will proceed with any proposal," Riversdale said.

"Rio Tinto advised the company that it is not in a position to submit a proposal for the acquisition of the company."

- BLOOMBERG