Chinese Whispers Regarding Rio Bid Persist

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By Rudi Filapek-Vandyck

Is it a case of where smoke is there’s fire or is China playing a game with the hearts and minds of shareholders and management at resources giants BHP Billiton ((BHP)) and Rio Tinto ((RIO))?

After a previous press report on the basis of unnamed sources revealing that China’s government owned investment funds and steel manufacturers are in the process of putting a counter bid together for Rio Tinto, Chinese media have now followed up with a name to attach to the story.

According to the latest Chinese press reports on Tuesday, the country’s largest steel producer Baosteel Group is likely to launch a bid for Rio Tinto.

“We are considering it and the chance of putting forward a bid is very high,” the 21st Century Business Herald quoted Xu Lejiang, chairman of Baosteel.

Some more detail from the story emerged with the newspaper quoting Lejiang as saying it was important for Baosteel to have its own mines.

When asked about the price of a possible deal, he apparently responded with “[USD]200 billion is probably not enough.”

BHP’s current offer values Rio Tinto at approximately US$142bn.

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