Rio Tinto Raises Bid For Riversdale Mining

Rio Tinto RIO, the world's second-largest mining company, has raised its bid for Australian coal producer Riversdale Mining to $3.9 billion in an effort to ward off challenges from steelmakers that own stakes in the coal company that threaten the deal.

Brazil's Companhia Siderurgica Nacional SID and India's Tata Steel have recently boosted their stakes in Riversdale to gain a better position in negotiating coal contracts. Rio is looking to gain access to Riversdale's vast coal reserves in Mozambique at a time when coal prices are soaring due to surging demand by emerging markets steelmakers.

Tata Steel owns 27.1% of Riversdale and CSN owns 19.9%.

Rio's offer of $16.50 a share for Riversdale values the company at 9% above where its Sydney-listed shares closed yesterday. Riversdale CEO Steve Mallyon acknowledged in an interview with Bloomberg Television that there is no competing offer to Rio's and that he thinks Rio will ultimately be successful in acquiring his firm.

A successful takeover would add 13 billion tons of coking coal to Rio's resources, split between Riversdale's Zambeze project and the Benga development in Mozambique, Bloomberg reported.

Rio has extended the deadline for its offer by two weeks to April 1.