china's move may spur counter bids

http://af.reuters.com/article/namibiaNews/idAFTOE72706R20110308?pageNumber=1&virtualBrandChannel=0

China's move on Kalahari may spur counter bids

* Rio seen as potential suitor due to Namibian mine proximity

* Rio owns 14 pct stake in Extract and its parent Kalahari

* Japan's Itochu owns 14 pct of Kalahari as well

* Extract shares up on expectations of offer (Adds details of Itochu shareholding, background)

By Sonali Paul

MELBOURNE, March 8 (Reuters) - A $1.23 billion potential takeover offer by a Chinese state-run group for Kalahari Minerals may prompt Rio Tinto to consider its own bid for the uranium miner.

The 290 pence per share offer by China Guangdong Nuclear Power Holding Corp would allow China's government access to uranium to boost its atomic generation efforts.

China has invested heavily in securing global commodities to fuel an economy that grew more than 10 percent in 2010. Companies have made $15.2 billion worth of overseas acquisitions of uranium companies alone since 2003, Thomson Reuters data shows.

London-listed Kalahari was trading 2.8 percent above the offer price early on Tuesday, suggesting that the market is expecting a higher bid.

Rio Tinto owns 14 percent of Kalahari and has indicated an interest to buy smaller miners, raising the prospect that it could consider a takeover.

"Rio has flagged a willingness to undertake those sort of small-to mid-tier transactions," said Ben Lyons, an analyst at ATI Asset Management, which owns Rio Tinto shares.

Japan's Itochu Corp also owns 14 percent of Kalahari. Both Rio and Itochu could either make a bid on their own or, as shareholders, block an offer.

Kalahari on Monday said it would recommend the offer to shareholders if a formal bid was made on the proposed terms.

The offer for Kalahari has prompted market speculation that other companies in the sector will be targeted for takeovers.

Shares of Australia's Extract Resources jumped 7.3 percent on Tuesday on expectations that Rio would move ahead with an offer for the Namibia-focused miner.

Rio is a 14.2 percent shareholder in Extract and has long been seen as a suitor because the two companies have neighbouring uranium projects in Namibia.

Kalahari owns 43 percent of Extract.

Rio has said it was looking at acquisitions worth $5 billion or less. It has already made a $3.9 billion takeover offer for Mozambique-focused coal miner Riversdale Mining , which is likely to be extended for a third time later this week.

Rio Tinto declined to comment.

China's planned takeover of Kalahari underscores the desire of the world's second-biggest economy to lessen its reliance on traditional sources of energy such as coal.

Fast-growing, resource-hungry China has invested heavily in mining assets in Latin America and Africa.

Extract said last month it was holding talks with Rio Tinto on jointly developing its Husab uranium project and Rio's Rossing uranium mine, both in Namibia, but that did not involve a takeover.

(Additional reporting by Taiga Uranaka and Terril Jones) (Reporting by Sonali Paul; Editing by Michael Flaherty and Neil Fullick)