Rio Tinto tipped as rival WMC bidder

The world's second-biggest miner, Rio Tinto, has said it might be in the market for more uranium mines, fanning speculation it could launch a rival multi-billion-dollar bid for WMC Resources.

"We would not exclude the acquisition of other uranium-related assets," Rio Tinto chairman Paul Skinner said.

WMC, which controls 38 per cent of the world's known uranium at its Olympic Dam lode and also mines nickel and copper, has endorsed a A$9.2 billion ($9.8 billion), or A$7.85 a share, takeover bid from BHP Billiton.

But WMC shares have traded above BHP Billiton's offer price since the bid was launched in March on speculation that Rio Tinto, in partnership with Canadian nickel group Inco or Swiss-based Xstrata, were accumulating WMC stock ahead of a counter bid.

WMC closed on Friday at A$7.96, off an earlier high of A$8.

Xstrata has launched an unsuccessful hostile bid for WMC this year.

"The new bid is rumoured to be in the region of A$8.40 and involve a scrip component," said Grant Craighead, an analyst for mining stock researchers Fat Prophets in Sydney.

"The logic behind a joint bid would be that Inco or Xstrata would purchase WMC Resources' nickel assets, while Rio Tinto would retain and expand Olympic Dam."

Analysts in London reacted with scepticism to talk of a Rio counterbid for WMC.

"I'd be very, very, very surprised if Rio Tinto could come out and find value at a price that was going to knock out BHP Billiton," said Investec Securities mining analyst Nick Hatch.

However, there is time for rivals to make a move. So far BHP has secured only 3 per cent of acceptances and, last Thursday, the company was forced to extend the closing date of its offer by almost a month to June 3.

Inco chief executive Scott Hand said: "Australia is a great place to invest ... therefore our objective is to be here."

He would not be drawn on the question of a joint bid for WMC.

"As far as I'm concerned, we are always willing to look at good nickel assets whenever we have the opportunity to do so."

Skinner said the market for uranium had rebounded strongly from a low point in the 1990s, with nuclear power among a number of alternative energy sources garnering attention, particularly in power-starved China, as oil prices rose.

"China has quite a lot of energy issues to manage," he said.

"I don't think China will be a smooth ride but, all in all, it looks like a strong market for Rio Tinto."

Rio Tinto already mines uranium from deposits in Australia's Far North through 68.4 per cent-owned subsidiary Energy Australia.

- REUTERS