BHP chief says China to buy stake in firm one day - Yahoo! Finance

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Wednesday May 7, 01:31 PM
Reuters

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BHP chief says China to buy stake in firm one day

LONON (Reuters) - Chinese investors are certain eventually to buy a stake in mining group BHP Billiton (LSE: BLT.L - news) <BLT.L> <BHP.AX>, Chief Executive Marius Kloppers said on Wednesday.

"Various parts of China that have got surplus funds, capital to deploy, are deploying that across a wide range of things in the world," he told a investor briefing.

"I have no doubt that one day we will see them show up on our register. I just hope that the market takes that for what it is at that point in time, a genuine investor."

He declined to comment on rumours that Chinese investors were ready to buy a stake in the firm, the world's largest mining group.

In February, Chinese state-owned mining group Chinalco shook up the mining sector by making a surprise raid on Rio Tinto (Frankfurt: 855018 - news) <RIO.L> <RIO.AX>, buying a 9 percent stake for $14 billion (7.2 billion pounds).

The purchase at 60 pounds a share, a stiff premium at the time, was widely seen as an effort to complicate BHP's all-share takeover bid for Rio.

China opposes the link-up as giving the combined firm too much pricing power in commodities such as iron ore.

A report in the Australian newspaper last month said China was in the early stages of formulating a plan to buy a chunk of BHP larger than Chinalco's Rio stake.

ANTITRUST FILING

BHP expects to file a submission on its Rio takeover bid with EU competition authorities in a matter of weeks, Alberto Calderon, chief commercial officer and head of the firm's takeover team, told the briefing.

Kloppers continued a war of words with Rio, which has spurned BHP's offer as undervaluing the company and its growth prospects.

Kloppers said Rio's shares had dipped below BHP's offer price because investors recognised that BHP was outperforming Rio in terms of operating results.

"The market is absorbing the data recently published by both companies, including our production report where despite a number of natural events out of our control, we showed a much stronger performance than Rio Tinto in our core commodities."

BHP shares fell 0.7 percent to 1,935 pence by 1:05 p.m. while Rio shed 0.4 percent to 6,334 pence, largely in line with the UK mining index.

Rio shares were at a 6.1 percent discount to the BHP share offer of 3.4 of its shares for each Rio share.

The takeover bid, worth $173 billion at current share prices, would be the world's second largest after mobile phone giant Vodafone (LSE: VOD.L - news) 's <VOD.L> purchase of Mannesmann in 2000.

The pairing would forge a mega-mining group with a market capitalisation of $400 billion that would be a major force in a range of industrial-use commodities such as copper, aluminium, coal and iron ore.

(Reporting by Eric Onstad; Editing by Quentin Bryar)

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