Sunday, January 23, 2011

GREEN LIGHT FOR RIO TINTO TAKEOVER OF RIVERSDALE

The Australian regulatory body, the Foreign Investment Review Board (FIRB), on Friday approved the takeover bid by the mining giant Rio Tinto for 100 per cent of Riversdale Mining, one of the companies with major coal concessions in the western Mozambican province of Tete.The Rio Tinto offer is to purchase Riverdale in its entirety for 16 Australian dollars (slightly less than 16 US dollars) a share. Rio Tinto would thus spend about 3.9 billion Australian dollars on the takeover.The takeover closes on 18 February, but seems almost certain to go ahead, since Riversdale has already recommended that its shareholders should accept the Rio Tinto offer, in the absence of any higher proposal.The Riversdale board declared that the Rio Tinto offer “delivers certain value for your Riversdale shares”, and warned that if the offer did not succeed “the Riversdale share price may fall”.The 16 dollars offered is much higher than the price for Riversdale shares quoted on the Australian stock exchange in the months prior to the Rio Tinto bid. Riversdale’s main project in Tete is at Benga, in Moatize district, where production from an open cast coal mine is expected to start later this year. High quality hard coking coal will be exported from Benga, and some of the thermal coal will fuel a planned power station.On the other side of the Zambezi river, Riversdale is exploring a second area, in Changara district, which also has high potential for coking coal exports.

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