RIO - Over $100??

[Huang Chung]

Boy oh boy.....For most of us playing the smaller end of the resource sector, I don't think it will matter whether a bid succeeds or not. Just the fear of any tie ups between Rio / BHP / CVRD, either now or in the future, will likely see the Chinese / Japanese take steps to shore up their supply of commodities so they are not dictated to by just one or two mega suppliers....i.e. deals with, or takovers of our mid-sized miners.

Looks good for our smaller iron ore companies in particular......

Opinions anyone??

[Viking]

Well, the rumor now confirmed~ and rejected~
but the repercusion will be huge IMHO~
While we were talking about the Chinese coming out with big cheque book~ seems couple of our ones is already actioning to expand their territory~

I guess, this may make the small/medium miners look more like a takeover target by those mega players in the short-term... be good for the SP~

[Viking]

This one seems got his fact right~ and quite a balanced views~

Simon Bowers
Guardian Unlimited

The world's largest mining group BHP Billiton is seeking to take over rival Rio Tinto in a deal that would catapult it to a market valuation of about $360bn (£170bn) — greater than that of Microsoft and equivalent to the gross domestic product of Ukraine.

After weeks of market rumours, Rio today confirmed it had recently received an all-share indicative offer, which had been swiftly rejected. BHP added it was continuing to push for a meeting to discuss its proposals.

BHP's spurned takeover approach, marks a breath-taking first move for 45-year-old Marius Kloppers, who was only promoted to the post of chief executive last month after the retirement of his mentor Chip Goodyear.

Mr Goodyear had run the company since 2003, when his predecessor Brian Gilbertson resigned after failing to persuade BHP chairman Don Argus to back a planned bid for Rio. Mr Argus is firmly behind the latest approach.

Both companies have major listings on the London stock exchange but have strong roots in Australia where many of their mines are located and where they form a central a pillar of the economy.

A combination would underscore Austraila's vital role in supplying iron ore to the seemingly insatiable Chinese steelmakers in the midst of an unprecedented economic boom.

While Brazilian firm CVRD is currently the world's largest iron ore supplier, with about 36% of the global market, Rio and BHP's Australian operations are the number one and two suppliers to China, benefiting from comparatively low shipping costs. A merger would give them a global share similar to that of CVRD.

China accounts for about 40% of world iron ore consumption. Some analysts believe it will produce more than 480m tons of steel this year — double the production levels of 2003.

BHP wants to offer three shares for every Rio share, valuing Rio at a premium of about 20% using Wednesday night's share price. But Rio rejected the indicative offer — which, if successful, would be the world's second largest after Vodafone's acquisition of Mannesmann — saying it "significantly undervalues Rio Tinto and its prospects". BHP nevertheless said yesterday it "intends to continue to seek an opportunity to meet and discuss its proposals with Rio Tinto".

Last night Rio shares closed up 946p, or almost 22%, in London at £52.96. The prospect of the merger of the world number one and number three mining groups by market capitalisation sent a wave of speculative buying through the extraction stocks. Among the risers were Anglo American up 474p, or 15%, to £36.45 and Xstrata, up 348p or almost 11% to £35.73. Meanwhile, BHP closed down 100p at £16.56.

A union of BHP and Rio is unlikely to be cheered by Chinese steelmakers, led by Baosteel. They are already in the middle of tense annual negotiations with the two Anglo-Australian firms and others to set the price for iron ore next year. Mining groups are pushing for rises of up to 50% and believe they have a strong negotiating hand.

While there may be little Chinese competition regulators can do to block the possible union, analysts believe disgruntled customers may be appeased by the offer of minority stakes in certain assets, if a deal eventually materialises. Other competition issues could be satisfied by selling off assets.

Conservative analysts' estimates suggest cost savings from a takeover of Rio would be more than $500m, with much of that coming from the two group's operations in Pilbara, Western Australia, where they operate neighbouring iron ore mines with parallel rail and port facilities.

The value of iron ore mines, and potential synergies from them, are likely to prove central to any takeover discussions should they materialise, but BHP and Rio also have overlapping operations in copper, coal and aluminium.

Nevertheless, BHP said: "In preparing its proposal, BHP Billiton has examined in detail the regulatory issues and other practicalities of a combination." Rio, meanwhile, made no mention of regulatory obstacles to a merger in its rejection statement.

[Huang Chung]

Just saw Terry McCrann's piece on Sky Sunday Business where he made the suggestion that if BHP were allowed to take over Rio, then they would have to give the junior iron ore players in the Pilbera everything they want in terms of infrastructure access (i.e. rail and ports)...hence FMG's big rise on Friday.

[Huang Chung]

Boy oh boy.....For most of us playing the smaller end of the resource sector, I don't think it will matter whether a bid succeeds or not. Just the fear of any tie ups between Rio / BHP / CVRD, either now or in the future, will likely see the Chinese / Japanese take steps to shore up their supply of commodities so they are not dictated to by just one or two mega suppliers....i.e. deals with, or takovers of our mid-sized miners.

Looks good for our smaller iron ore companies in particular......

Opinions anyone??

Less than one month later and Sinosteel is bidding for Midwest.

Let the games begin.

[yogi-in-oz]

Hi folks,

RIO ... technically, the price action on 28072008 has confirmed 25072008,
as a morning star pattern and working from a geo perspective, we can
confirm 28082008 as another significant date.

Here's our astroanalysis for RIO, over the next few months:

11082008 ... significant and positive ... finance-related???

13-14082008 ... 2 significant cycles and positive news expected here

22082008 ... minor and positive lunar aspect

28-29082008 ... 2 significant and conflicting time cycles, one
positive and one negative = flat trading at a high ???

03-05092008 ... significant and negative news expected here,
as 2 negative RIO cycles, come out to play

29092008 ... 2 negative and one positive cycle, should focus
a negative spotlight on RIO, at New Moon

06102008 ... minor and positive lunar aspect

13-14102008 ... minor and positive cycle

24102008 ... minor time cycle

29-30102008 ... minor and positive light on RIO

07-10112008 ... minor and positive news expected

17-18112008 ... significant and positive cycle - finance-related ???

25-28112008 ... 3 time cycles to bring minor news

15-16122008 ... 2 aspects to bring significant and positive news

29122008 ... positive spotlight on RIO

02-05012009 ... expecting a short and aggressive rally

07012009 ... minor news

09-12012009 ... minor and positive ... finances ... ???

15012009 ... minor news

26012009 ... minor cycle

-----

After a strong start to February 2009, particularly around 02022009,
the next round of negative cycles should begin, about 11022009 ...

More later

have a great day

paul



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[Joshuatree]

ARE WE THERE YET!!!

Near a bottom!!?

Craigs have a buy,12 mth target price $66 current price $43.06. "Tier 1 Aluminium will beat expectations again" PE 2015 est 10 , D/Y 7.3% NETT
EV/EBITDA 5.2

4 traders 4 buys 6 outperforms 4 holds 4 sells but not upgraded since 12 /10.

M/star hold valn $38 on 8th Dec

[Joshuatree]

S/P $39. 15 Low debt, sustainable div (unlike BHP) re 7.5% yield but fully franked? Two thirds of worlds Iron Ore miners are underwater, many won't re open for a long ,long time.

[macduffy]

Remember when the title of this thread was a serious prospect?

Can't count the number of times I was tempted to buy a few - somehow, never did.

[Joshuatree]

For the first time in my life I'm seriously considering an op here.Will continue watching and reading about this massive lowest cost producer.DYOR