[miningmx.com] — Sydney – Global miner Rio Tinto won control over Riversdale Mining on Friday with a $4bn offer, allowing the global miner to now dictate development of Riversdale’s prized coal mines in Mozambique.
Rio Tinto finally passed the 50% mark after failing over the past three months to persuade Riversdale’s two key shareholders, India’s Tata Steel and Brazil’s CSN, to sell their combined 47% stake.
Riversdale’s key assets are its Benga and Zambeze projects, which could supply up to 10% of the global market for coking coal, a key ingredient in steel-making.
Rio said it would move quickly to start working with Riversdale’s team to accelerate development of the projects, with Benga due to start exporting coal later this year.
“The growth prospects for the Riversdale assets are considerable,” said Rio Tinto Energy CEO Doug Ritchie.
The Zambeze project is the big prize with 9 billion tonnes of resources, but requires infrastructure to get the coal to port.
Riversdale has said if Rio did not go ahead with its bid, it would would have to raise $3bn just for the first phase of the project.
Rio has already appointed three of its senior executives to the Riversdale board and plans to appoint more.
“The new Riversdale board will reflect our majority shareholding and help clear the way for the development of Riversdale’s assets as quickly as possible,” Ritchie said.
Rio’s stake is expected to increase its stake further, with its takeover offer remaining open until April 20.
The global mining giant earlier in the week cleared a 47% target it had set itself, and raised the price of the deal to A$16.50 a share.
The higher price depended on Rio getting to at least a 47% stake in Riversdale by late April 6, otherwise it would have paid A$16 a share. Riversdale shares closed 1c higher at A$16.52 on Friday.
Rio’s offer, announced in December, was originally conditional on at least 50% acceptances. However, it was forced to revise that plan last week after Tata Steel, with 27%, and CSN, with 19.9% declined to sell.
The bid fits with Rio’s strategy of developing large, long-life, low-cost assets, as China and India fuel demand for African coking coal. Reconstruction activities in Japan are likely to increase demand still further.
Coal prices have seen sharp spikes since December in response to floods in Australia, Japan’s disaster and Germany’s decision to shut some nuclear generators.
