BHP tried to takeover RIO just before the GFC. By memory RIOs debt was part of the issue as well as the Europeans. China bought a 10% stake of RIO to try to block it.
The world is in a different place now, and having a strategic alliance via a merger of the 2 global behemoths might pass given the fears of China. This would ensure western control of supply. But I dare say you’d need Rio to be Australian listed to avoid more regulation and red tape from the Europeans. Much more to all this, but I’d personally like to see. Huge synergies exist with RIO and BHP merged via Escondidia and the Pilbara.
Only issue is BHPs general distain for sovereign risk in Africa and potentially Mongolia. Maybe demerging or selling Simandou and or some of the Mongolian copper asset passes the test? Throw in a demerger of aluminium so a separate listed entity… then finally demerger lithium and its minerals business (ie diamonds, borates etc). So essentially BHP keeps Pilbara, Canada iron ore, escondida, US copper assets.
RIO Price at posting:
$109.29 Sentiment: Buy Disclosure: Held
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