vertical, page-39

BHP’s Kloppers makes case for Rio bid
14/05/2008 By: Niraj Shah

BHP’s Kloppers makes his case for Rio bidBHP Billiton Limited (BHP) chief executive Marius Kloppers said the mining giant would focus its energies on tier 1, low cost and long-life assets. He also used his address to a Global Mining conference to point out BHP’s “superior potential for growth” relative to its takeover target Rio Tinto Limited (RIO).
Advertisement

During his presentation to the Merrill Lynch Global Mining conference in Florida, Mr Kloppers highlighted the group’s scale and diversification as well as its focus on high margin commodities both in its current production profile and future development pipeline.

He said that between 2007 and 2012, BHP Billiton’s compound annual growth rate (CAGR) was expected to be 6.9% on a copper equivalent volume basis.

On a comparable basis, he said Rio Tinto was expected to deliver a CAGR of around 6%..

More importantly, he said BHP Billiton’s growth was driven by higher margin commodities such as petroleum and iron ore

Separately in an interview with CNBC Mr Kloppers suggested that he wouldn’t rule out adding a cash portion to his $177.7 billion, all-stock offer for Rio.

“We can't rule out anything,” he responded when asked if he would add a cash component.

However, he noted that commodity price movements since the initial approach had increased the value of the scrip offer.

“Since we made our bid I think oil prices have moved up substantially, other commodity prices which we have in our portfolio moved up substantially and since we are paying with our scrip, this means that the value of our offer has effectively increased,'' he said.

At 1050 AEST, BHP Billiton shares were up 95c, or 2.1% at $46.73, while Rio Tinto shares were up $5.47, or 3.8% at $149.97.