Sydney: A consortium of state-owned Indian mining and energy companies will decide this week whether to trump Rio Tinto's $3.9 billion takeover bid for Riversdale Mining. Riversdale's coalmines in Mozambique and South Africa represent an attractive target for India, which is completely dependent on imports to stoke the furnaces of its booming steel industry.
The company already has a significant Indian presence on its share register in the shape of Tata Steel, the seventh largest steel manufacturer in the world, which owns more that 24 per cent of Riversdale.
International Coal Ventures, a cash-rich consortium of five large Indian state-run companies, will decide whether to go ahead with its bid at a board meeting on Thursday, the chairman, C.S. Verma, told Bloomberg on Saturday. "Our bid price for Riversdale will be higher than Rio Tinto's if it is to be a viable bid," Mr Verma said after an ICVL meeting to discuss the bid.
The consortium's members "could not conclude the discussions" and had asked for more information from its adviser, Citigroup, he told Reuters. He said ICVL had not been in talks with Tata, which regards its stake in Riversdale as a strategic investment, about a possible joint bid.
A Rio Tinto spokesman declined to comment on the company's likely response to a bid from ICVL.
Rio's $16 a share offer became unconditional on Friday after receiving government approval and it is believed Rio Tinto will consider its options only if Thursday's ICVL meeting produces a higher bid.
A spokesman for Riversdale, which has recommended shareholders accept the Rio bid, could not be reached yesterday.
Rio Tinto already has its foot on 14.9 per cent of Riversdale but will have to act quickly if the Indian group makes a move because its offer is set to close in less than a month, on February 18.
The chairman of key ICVL shareholder Coal India indicated the consortium has the money to mount an independent bid. ‘‘Once the proposal goes through, funding will not be a problem because all of us have money,’’ the Coal India chairman, Partha Bhattacharyya, told Bloomberg.
Coal India, the world’s largest coal producer, owns 28 per cent of ICVL and wants to become ‘‘a leading global player in the energy sector’’, according to a statement on the company’s website.
India’s second-biggest steel producer, Steel Authority of India, also owns 28 per cent of ICVL. The country’s largest power generator, NTPC, its top iron ore producer, NMDC, and a steel maker, Rashtriya Ispat Nigam, each hold about 14 per cent.
Rio Tinto’s bid, which is being mounted using a Jersey-registered subsidiary, was waved through by the Foreign Investment Review Board last week. FIRB approval was required because Rio is listed on both the ASX and the London Stock Exchange.
The Treasurer, Wayne Swan, gave the company ‘‘unconditional approval’’ to buy 100 per cent of Riversdale.