Rio Tinto in talks on $3.5 bn bid for Riversdale

Miner Rio Tinto made a $3.5 billion bid approach for Africa-focused Riversdale Mining.

Miner Rio Tinto made a $3.5 billion bid approach for Africa-focused Riversdale Mining,sending the target firm’s shares surging 16 per cent and setting up a potential takeover battle.

Rios move on Australias Riversdale is likely to spark a bidding war,as the company has hard coking-coal projects in Mozambique that could eventually supply 5-10 per cent of the global market for the key steel-making material.

Brazils Vale is seen by some analysts as the most likely rival bidder,as it already has coal mines nearby in Mozambique. Indias Tata Steel,Riversdales top shareholder,was also seen as a potential bidder. Tata said it regarded its Riversdale stake as a strategic investment. Tata Steel will continue to monitor the situation and will take appropriate action as deemed necessary, the company said.

Xstrata,Anglo American and Peabody Energy could also be interested. Top coking-coal exporter BHP Billiton is seen as a less likely contender,as it has its own growth options in Australia. Xstrata and Anglo declined to comment. The company’s fourth-biggest shareholder,Australian investment firm LinQ Management,expects Riversdale to be hotly contested.