u238z1 steals another 100000 bhp, page-62

hotcopinvestor

I do not know why you have decided to assume that I was comparing RIO's assets with Billiton's assets. It should be very obvious to anyone that knew the BHP/Billiton merger that the deal was absurd for BHP's shareholders. Its only been made good for BHP shareholders by the massive rise in commodity prices since then.

I like RIO's management and assets, but they are not all that diversified (Alcan acquisition will help).

The issue is about overpaying for a merger, which is what RIO wants. I do not think that a merger is necessary to get the benefit of the most of the synergies as these can be obtained by JV structures. Once this gets up BHP's share price can once again move up, while RIO's will fall back to around $110.

The current fantastic iron ore prices will end within 5 years. Chinese government owned firms are to spend billions in WA developing billion tonne magnetite deposits. Clive Plamer alone controls 80 billion tonnes of magnetite deposit and has already made major deals. Yes I know that will put a floor on RIO and BHP's iron ore prices, but it will be a lot lower than what is being achieved currently (and much lower than what is expected under the current round of price negotiations). In addition the Chinese as monopolistic buyers will be able to use their WA operations to bargain even lower prices, just you wait and see. It will be just a matter of time before we get screwed by China in the same way as Japan and Korea were able to do for years.

loki