Tata Steel says “deep pockets needed” to counter-bid Rio Tinto’s Riversdale offer

Tuesday, 28 December 2010 17:02:45 (GMT+3)   -  
SteelOrbis News

Indian steel giant Tata Steel, which holds a 24 percent stake in Australian Stock Exchange-listed mining company Riversdale Mining Limited (RML), is not likely to counter Australian mining giant Rio Tinto Group's takeover bid for RML.

Quoted by local news sources, Tata Steel managing director H.M. Nerurkar said on December 27, "We have no discomforts with Rio Tinto's bid for Riversdale. We are watching the situation closely and have not taken any decision [on outbidding Rio Tinto's offer]."

He went on, "We have invested in Riversdale not for financial incentives, but to secure coking coal supplies for our Indian and European operations . . . so good management of Riversdale is essential for us," adding, "One needs deep pockets for making a counter-bid."

Meanwhile, other local sources reported that Indian Minister for Steel Virbhadra Singh denied news of plans by International Coal Ventures of India to join with Tata Group, and present a counter offer. The International Coal Ventures of India consortium includes state-owned companies Steel Authority of India, National Thermal Power Corporation (NTPC), National Mineral Development Corporation (NMDC), Rashtriya Ispat Nigam and Coal India.

As SteelOrbis previously reported, Rio Tinto Group and RML have entered into a ‘bid implementation agreement' for a cash offer through which Rio Tinto seek to acquire all of the issued and outstanding shares of the company. The offer price of AU$16 (US$16.05) per share values RML at approximately AU$3.9 billion (US$3.91 billion) and is up from the previous AU$15 offer.

RML owns large coal mines in Mozambique and has become a target for global miners. Riversdale's assets include the Benga project and the neighbouring Zambeze project in Mozambique which have high quality coking coal.

Indian newspaper Economic Times said on December 9 that Tata Steel could team up with an Indian metals company or a miner to make a counterbid for Riversdale Mining, in response to Rio Tinto's offer.

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