bhp rises to record on talk chinalco may seek

By Rebecca Keenan and Jesse Riseborough
May 14 (Bloomberg) -- BHP Billiton Ltd., seeking to buy Rio Tinto Group for $178 billion, rose to a record in Sydney trading on speculation Aluminum Corp. of China, known as Chinalco, may be preparing to purchase a stake.

There's ``speculation about an investment by Chinalco,'' Leigh Gardner, head of sales trading at ABN Amro Holding NV in Melbourne, said today by phone. It's been suggested the Beijing- based company may pay between A$60 ($56.41) and A$63 a share for a stake in the world's biggest mining company, he said. That's as much as 38 percent more than BHP's closing price yesterday.

China, the biggest buyer of metals, has been hurt by a threefold gain in commodity prices since 2002, prompting producers including Chinalco to make overseas acquisitions. BHP Chief Executive Officer Marius Kloppers said this month he had ``no doubt'' that Chinese investors would buy shares in his company.

China is in the ``early stages'' of planning to buy a bigger holding in BHP than the 9 percent Chinalco and Alcoa Inc. acquired in Rio, the Australian newspaper said last month. Chinese authorities had yet to determine which state-owned institution, or steel mill such as Baosteel Group Corp., would take a lead role in buying the stake in BHP, the paper said.

China needs raw materials to feed an economy that grew 11.4 percent in 2007, the fastest in 13 years. The nation's biggest commodity companies have said they're concerned the combination for BHP and Rio would concentrate supplies and may wield too much pricing power.