Friday June 5, 02:25 AM
Rio Tinto, BHP Billiton in iron ore joint venture
SYDNEY (AFP) - Mining giants Rio Tinto (LSE: RIO.L - news) and BHP Billiton (LSE: BLT.L - news) agreed a joint venture covering their Western Australia iron ore operations in a deal expected to save the firms at least 10 billion US dollars.
The agreement means assets in the vast region will be shared equally between the two companies, and involves BHP handing over 5.8 billion US dollars for Rio equity.
The deal was announced as Australian and British media reported that Rio's planned 19.5 billion US dollar tie-up with China's Chinalco had collapsed.
Shares in BHP, the world's biggest miner, shot up 6.0 percent to 37.22 Australian dollars on the Sydney market after the news, while Rio's shares remained in a trading halt.
"The synergies in this combination are so substantial that both companies have been investigating ways to combine these operations for more than a decade," said BHP head Marius Kloppers.
Rio chief executive Tom Albanese said the deal, which requires shareholder approval, was a "natural fit."
"We have long recognised the natural fit of our two iron ore businesses and the industrial logic for bringing them together in order to unlock substantial synergies," he said.
The iron ore tie-up comes after BHP announced in November it was dropping a hostile takeover bid for Rio due to the state of the global economy.
Rio had strongly resisted the bid, which effectively valued the world's third-biggest miner at 147.4 billion dollars in February 2008, when the offer was made.
Rio came under heavy criticism for fighting off the bid and its share price has dropped sharply as the global economy has slowed over the past eight months.
Rio instead announced in February that Chinese state-owned aluminium firm Chinalco would put 19.5 billion dollars into the company, marking Beijing's biggest foreign investment.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
