February 4, 2009 / 1:08 PM / 11 years ago

BHP still looking at M&A, Rio assets 'attractive'

LONDON, Feb 4 (Reuters) - BHP Billiton BLT.L, the world’s biggest miner, is still hunting for cheap takeovers and finds some of rival Rio Tinto’s (RIO.L) assets attractive, but the subdued market outlook means it is in no hurry to act.

Chief Executive Marius Kloppers said on Wednesday BHP (BHP.AX) was seeking to take advantage of its position of having the strongest balance sheet among major miners while some rivals are weighed down by debt burdens.

Rio Tinto (RIO.AX) is scrambling to sell assets to help whittle down its debt load of nearly $39 billion.

Some analysts have said Rio might be interested in selling its stake in Chile’s Escondida, the world’s biggest copper mine, though Kloppers declined to give details of which Rio assets it might be keen on buying. “Certainly there are certain (Rio) assets that would be attractive and I can’t take that comment any further,” Kloppers told a conference call following first-half results.

Rio might be able to get $6 billion for its 30 percent stake in Escondida, which BHP operates, Credit Suisse has said.

BHP, which dropped a $66 billion hostile bid for Rio in November, has pre-emptive rights to buy the remaining stake.

BHP posted a 2.2 percent rise in first half profits before exceptional items on Wednesday. Cash flow jumped 74 percent and it was able to cut its already low debt. [ID:nSYD392775]

This strong stance would help the group as it looked at possible takeovers amid a sharp fall in metals and share prices, but it was would only buy top-quality assets, Kloppers said.

“The fact that we’ve haven’t executed anything means that we probably haven’t identified opportunities which fit properly,” he said. “But if and when these opportunities arise, we have the capacity to act.”

Kloppers said he was not worried that no deals have been sealed yet since the firm expects the market to stay weak in the medium term.

“We always have something that we’re looking at, but I think that our window of opportunities would... extend a little bit further, given the weakness that we’re seeing in markets.”

When asked about potential acquisitions in the potash sector, he declined to comment, but noted that prices for the substance mainly used for fertiliser had held up better than many other commodities.

Last June, BHP’s head of special projects said the group planned to pursue “multiple projects” in potash over the next few years.

BHP, which is working towards developing the first potash mine in more than 30 years in Saskatchewan, Canada, bought Anglo Potash Ltd last year for $282 million. (Reporting by Eric Onstad; editing by John Stonestreet)

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