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

Tuesday, 28 December 2010 17:02:45 (GMT+2)

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.

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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US unemployment rate climbs in November

The US Department of Labor announced Friday that employers only added 39,000 jobs last month, compared with 172,000 jobs added in October, bringing the US unemployment rate up to 9.8 percent, 0.2 higher than October's figure, and the highest level in seven months.

The construction sector took the biggest hit last month losing another 5,000 jobs since October and raising the unemployment to 18.8 percent, a huge jump from the 17.3 percent construction unemployment rate in October.

The construction sector has continued to lose jobs during the past twelve months even as overall private employment has picked up. Since November 2009, the industry has lost 117,000 jobs while the private sector added 1.08 million jobs. The industry's 18.8 percent unemployment rate, not seasonally adjusted, also was the highest of any industry and roughly double the overall unemployment rate.

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