Australian Financial Review PRINT EDITION: 14 Mar 2011 Jamie Freed
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"Rio's plays for Simandou, Riversdale Mining and Extract Resources' Husab project can be seen as a welcome push to diversify into what are undoubtedly tier-one assets in emerging economies.
But its strategy of pursuing joint ventures rather than securing outright ownership, while handy in mitigating the cost of developing such projects and avoiding a full loss in the case of another Bougainville, has left it exposed to some aggressive manoeuvres by rivals and potential major customers."
Rio could have moved earlier on Riversdale; CSN bought an initial 16.3 per cent stake from the late Queensland coal entrepreneur Ken Talbot in November 2009 at $6.10 a share. But at that time, Rio's one big risky move, the Alcan acquisition, had backfired horribly, leaving its balance sheet saddled with debt and its shareholders unsupportive of more deals. Rio has now offered $16.50 a share.
Rio faces the same situation in Namibia, where it moved cautiously on Extract Resources' Husab project, next to Rio's Rossing mine."
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"It bought minority stakes in Extract and in Kalahari Minerals, which owns 42.8 per cent of Extract. But it has been in talks with Extract about a joint venture over Husab rather than a takeover.
China Guangdong Nuclear Power threw a spanner in the works last week by announcing a potential bid for Kalahari Minerals. A follow-on offer for Extract is likely.
A successful Chinese takeover of Extract wouldn't preclude Rio from forming a production joint venture. Rio has many other joint ventures with Chinese groups around the globe, including the Simandou project and Channar in the Pilbara.
But some Rio shareholders are smarting that the Anglo-Australian miner didn't have the foresight, or more likely the risk appetite and investor trust, to bid for all of Extract a few years ago when the uranium explorer's share price was much lower."
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