Rio defends its rebuff of BHP to its shareholders
SYDNEY, April 24 (Reuters) - Rio Tinto Ltd/Plc (RIO.AX)(RIO.L), fighting one of the biggest corporate takeover battles ever with unwanted suitor BHP Billiton Ltd/Plc, reiterated on Thursday it was better off riding China's commodities boom alone.
Top Rio and BHP executives have staged a war of words as BHP lobbies its case for a tie-up with Rio shareholders and anti-trust agencies worldwide, a process it says will take until at least December.
Rio's board has rejected BHP's offer of 3.4 of its shares for every Rio share, worth $147 billion when it was pitched in February, as "out of the ballpark", given pricing for industrial commodities such as copper, iron ore and coal has never been higher thanks to China's hunger for imported raw materials.
Without giving a price, Rio Chairman Paul Skinner told a shareholder meeting in Brisbane that any fresh offer would need to reflect a "significant premium to what we can achieve ourselves".
"So far we have not seen that," Skinner told the annual general meeting of Australian shareholders. "In the meantime the momentum in our business continues to develop strongly."
If BHP succeeds, it would mark the second largst corporate takeover after Vodaphone's $203 billion acquisition of Mannesman.
Skinner said there was a false impression in the mining sector that the U.S. financial crisis was hurting producers.
"This is not how we see it," he said. "Last year China consumed more than half the world's iron ore imports, and its total steel consumption was over three times that of the U.S."
BHP Chief Executive Marius Kloppers attacked Rio's performance claims in an interview with the Financial Times this week, saying Rio's chief executive, Tom Albanese, had "missed the boat" on China and the dizzying surge in oil prices.
Both Rio and BHP sell billions of dollars worth of ores and refined minerals to China each year.
Rio has long eschewed the oil business, while oil and accounts for about 15 percent of BHP's annual earnings.
Albanese told shareholders hydro-electricity assets Rio picked up in last year's acquisition of aluminium group Alcan were equivalent to a 100,000-barrels-per-day-plus oilfield.
He said the Rio's current hydro-electric generating capacity of nearly 3,700 megawatts was "equivalent to an oilfield producing 175,000 barrels a day forever".
Last week Albanese said that while investments in aluminium endure over decades, the oil business suffered from short reserve and production ratios and was a sector always struggling to replace reserves, much less trying to grow.
Rio in November paid $38.1 billion for Alcan, making it the the world's largest producer.
Skinner also said February's raid on 12 percent of Rio's London-listed stock by Chinese aluminium group Chinalco was an endorsement of his company's growth prospects. Analysts have suggested the Beijing-controlled firm could be readying a counterbid for Rio. (Reporting by James Regan)
