Rio Tinto banks on Asian giants to justify huge Alcan bid
Monday, 16 July 2007
SYDNEY, July 15 (AFP): Mining giant Rio Tinto today defended the price it has offered for Canada's Alcan, saying the robust economic growth of China and India would see the business prosper.
The 38.1 billion dollar bid for the aluminium producer, the mining industry's biggest-ever acquisition, would secure "a first-class, tier-one asset", said chief executive Tom Albanese.
"There aren't many of them out in the mining sector and in the market right now," he told the Australian Broadcasting Corporation's Inside Business programme.
The creation of the world's largest aluminum company, to be called Rio Tinto Alcan, would benefit from the rapid economic growth of China and India, Albanese said.
India's growth was five years behind China's but gross domestic product in both countries was expected to increase at almost nine per cent annually until 2015, he said.
"In a metal like aluminium, which is very much going to benefit as we see China continue to grow, we have found that confluence point where we are able to provide an offer which fully met the needs of the Alcan shareholders."
The offer was also "in the mantra of value that we have within Rio Tinto and very much consistent and complimentary with our strategy".
But international ratings agency Fitch Ratings said it was placing Rio Tinto on credit watch negative, noting the proposed transaction was highly leveraged and taking place "at the top of the current commodity price cycle."
The 38.1 billion dollar bid for the aluminium producer, the mining industry's biggest-ever acquisition, would secure "a first-class, tier-one asset", said chief executive Tom Albanese.
"There aren't many of them out in the mining sector and in the market right now," he told the Australian Broadcasting Corporation's Inside Business programme.
The creation of the world's largest aluminum company, to be called Rio Tinto Alcan, would benefit from the rapid economic growth of China and India, Albanese said.
India's growth was five years behind China's but gross domestic product in both countries was expected to increase at almost nine per cent annually until 2015, he said.
"In a metal like aluminium, which is very much going to benefit as we see China continue to grow, we have found that confluence point where we are able to provide an offer which fully met the needs of the Alcan shareholders."
The offer was also "in the mantra of value that we have within Rio Tinto and very much consistent and complimentary with our strategy".
But international ratings agency Fitch Ratings said it was placing Rio Tinto on credit watch negative, noting the proposed transaction was highly leveraged and taking place "at the top of the current commodity price cycle."