BHP To Try To Block Rio Tinto-Chinalco Deal – Newspaper Report

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By Rudi Filapek-Vandyck

BHP Billiton ((BHP)) is set to gatecrash the Chinese Government’s US$19.5bn bailout of Rio Tinto ((RIO)), reports UK newspaper The Times on its website today.

According to the report, Rio Tinto will today announce that it intends to raise US$12.3bn by selling stakes in its mines to Chinese shareholder Chinalco, plus a further US$7.2bn by issuing a convertible bond. When the bond converts into shares, Chinalco will raise its stake in Rio from 9% to 18%. The deal would be subject to Australian regulatory approval.

However, according to the newspaper, former suitor BHP Billiton is “understood to be ready to crash the arrangement between Rio and the Chinese”. Reports the newspaper: If – after full details of the Chinalco investment emerge on Thursday- BHP decides the Chinese are getting assets it would like on the cheap, it will decide to jump into action.

“BHP’s likely intervention in the Rio bailout could prompt shareholders to question the value of selling mine shares to Chinalco. China is the largest consumer of metals and there is concern that it could use its shareholding in Rio to drive down the price of key raw materials”, reports the newspaper.

For the full report, see:

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5712389.ece

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