Rio Tinto talk boosts WMC

MELBOURNE - Shares of WMC Resources rose to a record on speculation Rio Tinto Group may trump a A$9.2 billion ($9.86 billion) takeover offer by BHP Billiton for WMC.

Anglo-Australian miner Rio Tinto may have asked Macquarie Bank to buy as much as a 10 per cent stake in WMC, the world's fifth-largest nickel metals producer, said Jamie Spiteri, a trader at Shaw Stockbroking.

"We're also hearing rumours Rio may make a bid for WMC, and the prices of these companies are alluding to that," said Richard Wallace at Wallace Funds Management in Sydney.

Rio Tinto's Melbourne-based spokesman Ian Head declined to comment on the speculation yesterday. Matthew Russell, a spokesman for Macquarie Bank in Sydney, also declined to comment.

Shares of Melbourne-based WMC closed 16Ac higher at A$8.13.

BHP Billiton, the world's largest mining company, had bid A$7.85 a share for WMC and its offer closes on May 6.

"We have agreed to neither solicit nor talk to other companies," said Troy Hey, a spokesman for WMC in Melbourne. The company hadn't had an approach from other companies, he said.

WMC's chief executive Andrew Michelmore said on April 14 that there were no other offers for the company pending.

WMC has recommended BHP Billiton's offer and would need to pay BHP Billiton A$92 million if another company acquires more than 50 per cent of its shares or interest in some of its assets.

Buying WMC would give BHP control of the Olympic Dam project in South Australia, site of the world's biggest uranium deposit and fourth-largest copper and gold deposit.

For Rio Tinto, gaining control of WMC would give it a near monopoly over Australia's uranium production.

Rio Tinto is holding its annual general meeting in Sydney on Friday April 29. Rio Tinto gave up 27Ac to A$43.37, and BHP Billiton lost 16Ac to A$16.89.

- BLOOMBERG