Rio pursues growth as BHP offer dismissed at too low

Rio Tinto has made it clear that its rejection of BHP Billiton’s $147 billion hostile takeover bid was based on price alone.

Tom Albanese, Rio’s chief executive, has always argued that the offer of 3.4 BHP shares for one Rio share undervalued the group.

This week he restated his position while being questioned by reporters in Australia, saying: “We rejected BHP’s proposal strictly on the basis of value”.

BHP, which is the world’s largest mining company, wants to combine Rio’s mining and metal processing operations with its own.

The move would leave much of the world’s supply of iron ore, copper, aluminum and other commodities in the hands of a single supplier.

Failing an improved offer from BHP, Rio says it will be pursuing its own growth plans.

The company, which recently acquired Alcan, plans to sell around $15 billion of assets in the next two years and would consider partnerships or joint ventures with Chinese miners.

Chinalco, the Chinese aluminium group, took a $14 billion stake in Rio last month and Mr Albanese is confident that Rio can provide mining expertise, while Chinese partners can bring infrastructure-building capabilities to such partnerships.

The world’s leading miners are expecting continued strong growth in Chinese demand for imported minerals to help offset any downturn in US markets in the coming months.