Rio Tinto's Albanese says BHP bid proposal "dead in the water"

Rio Tinto stock closed down and BHP Billiton up on comments from Tom Albanese, Rio’s CEO, that there was nowhere near enough value in BHP’s proposed bid and that it was “dead in the water”.

SYDNEY (Reuters)  - 

Rio Tinto Ltd/Plc Chief Executive Tom Albanese said on Friday BHP Billiton Ltd/Plc's $140 billion takeover proposal to assemble super mining house was now "dead in the water."

Albanese also said Rio had been approached with offers from other suitors since BHP tabled its plans last month, but was sticking with its independent growth strategy.

A BHP and Rio combination would hold about 27 percent of the world market for iron ore and control much of the global flow of aluminium, coal, copper, uranium and diamonds.

"There just wasn't enough value, so it is dead in the water," Albanese told CNBC television.

The comments pushed Rio's Australian stock down about half a percent to A$144.02. BHP shares rose 0.7 percent and the benchmark S&P/ASX 200 index was up 0.9 percent.

BHP made public its offer of three of its shares for each Rio share on Nov. 8, after the Rio board refused to pursue friendly merger talks.

Albanese stopped short of saying Rio was not for sale at any price, but reiterated that the BHP proposal was " a couple of ballparks away" in terms of an attractive offer price.

"I wouldn't want to speculate, but it's going to take a lot," Albanese said when asked at what price would the board entertain an offer.

From the onset Albanese has said BHP's proposal significantly undervalued Rio's operations and growth prospects.

Having completed its $38 billion friendly takeover of Canadian aluminium group Alcan, Rio would now turn more toward organic growth, Albanese said.

"Organically, we can do great things," he said.

With Alcan in its fold and increases elsewhere in the company's production chains, Rio will be able to corner more of China's demand for the metal, Albanese said.

The Chinese last year consumed about a quarter of the world's aluminium, he said.

"This year they are consuming 30 percent of the world's aluminium and it just keeps going," Albanese said.

Blueprints had been drawn up for a tripling of iron ore production, while its copper business was also getting bigger, Albanese said.

Speculation that other parties may want to buy Rio was reinforcing the value of Rio's operations, Albanese said.

"Lots of people have been calling, but we have not been engaging," he said.

China's top steel group, Baosteel, has doused speculation it was planning to spoil BHP Billiton's takeover bid with a $200 billion offer of its own, saying it lacks the financial muscle. ($1=A$1.14) (Reporting by James Regan)

(c) Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Print story      Email story      Subscribe to free newsletter

Related Links ARTILCES:  BHP executive sees more high grade mines ahead  BHP/Rio: Ideas crystallising on possible mega merger  S&P: BHP/Rio merger could lead to sector suffering credit downgrades   Rio's strong bid defence could hold off predator BHP Billiton  Rio Tinto: heart on sleeve  Speculation that Chinese group will bid for Rio Tinto denied  OTHER PAGES:  IRON AND STEEL MINING FINANCE / INVESTMENT BASE METALS

Back