Rio ready to pounce on $10bn acquisitions
RIO Tinto says $US10 billion-plus acquisitions are back on the table — provided its credit rating is not put at risk — as the mining giant hunts for bargains amid turmoil in financial markets. At a briefing for London and New York investors on Tuesday night, Rio chief financial officer Guy Elliott highlighted Rio’s potential firepower and strong balance sheet and declared the miner was ready to move on the right opportunity.
The company also flagged potential delays to the $US6bn-plus Oyu Tolgoi copper and gold mine in Mongolia because of power issues, and said cost and schedule blowouts at the $US1.6bn Argyle diamond mine expansion in the Kimberley region of Western Australia were likely.
Mr Elliott, Rio’s longest-serving director, said current market volatility would provide opportunities for Rio, which had a strong balance sheet and a single-A credit rating.
“It’s possible that assets that normally aren’t available may come on to the market at such times,” he said.
“Rio Tinto will be in a position to take advantage of any such opportunities.”
Asked if the company was sticking to its previous comments that it would entertain “single-digit” billion-dollar acquisitions, Mr Elliott said: “Most companies would not confine themselves, particularly when it comes to mergers and acquisitions, and I don’t think we should.”
The company would assess potential acquisitions as to whether they were better value than building new mines, and whether they were large, low-cost assets and allowed Rio to keep its credit rating, he said.
Mr Elliott said there was potential for Rio to take out the stakes it did not own in Ivanhoe Mines and Energy Resources of Australia, but that this would have to be weighed up against other acquisition opportunities or spending on projects Rio already owned.
On Oyu Tolgoi, Rio copper chief executive Andrew Harding told investors that if an agreement between Mongolia and China to source Chinese power for the project could not be reached in “coming months”, a target of 2013 for first commercial production would not be met.
Credit Suisse analysts said they understood power line construction had started on the Mongolian side of the border but that less progress had been made on the Chinese side.
Argyle’s budget and timetable were under review because of flooding at the mine in the first half of the year and the strong Australian dollar, Mr Elliott said.
At the briefing, Rio energy chief executive Doug Ritchie again attacked the Gillard government’s carbon tax.
“The carbon tax, as proposed by government, will undermine Australia’s international competitiveness and hurt Australia’s export competing industries, potentially limiting jobs and investment growth,” Mr Ritchie said.
The company also flagged potential delays to the $US6bn-plus Oyu Tolgoi copper and gold mine in Mongolia because of power issues, and said cost and schedule blowouts at the $US1.6bn Argyle diamond mine expansion in the Kimberley region of Western Australia were likely. Mr Elliott, Rio’s longest-serving director, said current market volatility would provide opportunities for Rio, which had a strong balance sheet and a single-A credit rating.
“It’s possible that assets that normally aren’t available may come on to the market at such times,” he said.
“Rio Tinto will be in a position to take advantage of any such opportunities.”
Asked if the company was sticking to its previous comments that it would entertain “single-digit” billion-dollar acquisitions, Mr Elliott said: “Most companies would not confine themselves, particularly when it comes to mergers and acquisitions, and I don’t think we should.”
The company would assess potential acquisitions as to whether they were better value than building new mines, and whether they were large, low-cost assets and allowed Rio to keep its credit rating, he said.
Mr Elliott said there was potential for Rio to take out the stakes it did not own in Ivanhoe Mines and Energy Resources of Australia, but that this would have to be weighed up against other acquisition opportunities or spending on projects Rio already owned.
On Oyu Tolgoi, Rio copper chief executive Andrew Harding told investors that if an agreement between Mongolia and China to source Chinese power for the project could not be reached in “coming months”, a target of 2013 for first commercial production would not be met.
Credit Suisse analysts said they understood power line construction had started on the Mongolian side of the border but that less progress had been made on the Chinese side.
Argyle’s budget and timetable were under review because of flooding at the mine in the first half of the year and the strong Australian dollar, Mr Elliott said.
At the briefing, Rio energy chief executive Doug Ritchie again attacked the Gillard government’s carbon tax.
“The carbon tax, as proposed by government, will undermine Australia’s international competitiveness and hurt Australia’s export competing industries, potentially limiting jobs and investment growth,” Mr Ritchie said.
Comments
Post a Comment