Chinalco Hints Money No Object for Rio Buy, BHP Says No Way

BHP Billiton CEO Marius Kloppers never ceases lobbying for his company¡¯s proposed merger with Rio Tinto, and is keeping an eye on the moves of rival Chinalco, China¡¯s biggest aluminum and alumina producer and Rio Tinto¡¯s biggest shareholder, with a stake it bought at the beginning of the year.

For a large state-owned enterprise such as Chinalco, however, cash is not a problem, as China¡¯s state-owned banks will spare no effort to support its overseas M&A.

In February, BHP proposed a stock swap with Rio, according to which BHP would swap for every Rio share with 3.4 of its shares.
But an industry analyst said high price is not a problem for Chinese state-owned enterprises with sound credit. Since October, Chinalco has established strategic cooperation with major domestic commercial banks and has a credit line of nearly 100 billion yuan.

Chinalco¡¯s stake in Rio Tinto will not stop the merger of BHP and Rio, says Kloppers.

At present 70% of BHP¡¯s investors are also shareholders of Rio Tinto, and these investors are very likely to support the merger of the two companies.

By June 30, 2008, benefiting from surging commodity prices and China¡¯s strong demand, BHP¡¯s net profit in the fiscal year (June 30, 2007 to June 30, 2008) rocketed 25.3% from $47.47 billion in the previous year to a record high $59.47 billion.

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