Rio rebuffs BHP Billiton with case for revaluation

Rio Tinto, the leading copper miner, has issued a rebuttal to a probable hostile bid from BHP Billiton.

The company’s board believes that its assets are very much undervalued by the market and is making a strong case for a revaluation, which could force BHP to raise its proposed bid.

Some analysts now believe that Rio may manage to remain independent, particularly in view of the fact that anti-trust concerns with regard to iron ore production are likely to prove a major stumbling block to a merger.

Tom Albanese Rio’s chief executive, is widely publicising his company’s case, stating that: “The rise in global mineral demand is a trend that we expect to continue for decades because of fundamental demographic and economic shifts, especially in developing economies like China and India”.

His attempt to increase Rio’s value has already led to speculation that BHP might need to increase its proposed bid by at least 20%.

The company has also been explaining its plans to increase shareholder value, which it feels would be threatened by a merger with BHP.

In a strategic review document Rio has outlined up to $30 billion of potential divestments.

The assets in question include: Rio Tinto Alcan Engineered Products, Rio Tinto Minerals Talc; a 40% share in Cortez/Pipelin; 70% of Greens Creek and 80% of Northparkes.