Rio Tinto says it will lift this year's dividend 30% and spend $US3 billion on iron ore and diamond mines as it defends itself against the unwanted approach from BHP Billiton.
It also revealed ambitious plans to boost iron ore production in Australia and Guinea and copper in Peru, while highlighting billions more in asset sales and cost savings.
It was a combination of upbeat development and some hard-eyed assessment of what was worth keeping and was could be sold to raise cash to help pay for the ambitious development plans.
At a briefing in London last night, CEO, Tom Albanese claimed "the value in Rio Tinto is yet to be fully reflected by the market. We have a better growth pipeline than our competitors.''
That may be the case but the company's share price has certainly kicked higher since BHP appeared on the scene.
Rio has rejected BHP's $US128 billion all-share offer
Mr Albanese says Rio may treble iron ore production to more than 600 million tonnes a year. Forecast output from the planned La Granja copper project in Peru could be doubled, he said.
He said the company could lift iron ore production from the Pilbara to about 430 million tonnes a year by 2018, at a cost of $US10 billion.
Rio Tinto committed $US2.4 billion to the development of new two projects in the Pilbara – Mesa A and Brockman 4 – with production to start from 2010.
Mr Albanese said Rio infrastructure in the Pilbara gave the company a "clear advantage" over its rival BHP Billiton.
Outside the Pilbara, Rio identified the Simandou project in Guinea, Africa, as being able to produce up to 120 million tonnes a year, with first production due in 2013.
Rio also talked up the potential of its emerging copper projects and said the company was on track to become a big nickel producer, thanks to projects in the US and Indonesia.
It said the La Granja project in Peru, which was acquired from BHP Billiton in 2005, had the potential to produce in excess of 500,000 tonnes of copper a year, double previous estimates and it could be in production by 2014.
Mr Albanese indicated that a strategic review following the acquisition of Alcan, the Canadian aluminium group for $US38 billion, had identified at least $US15 billion and as much as $30 billion of potential disposals. The previous target was $US10 billion.
The total 2007 dividend would be increased by 30% with further annual increases of at least 20% in each of the next two years.
Rio said that increase would be achieved without compromising credit status or capital expenditure.
And that's something that could be demanded of BHP by its investors. BHP has bigger profits, cash flows and if the Rio deal doesn't work out, will be debt free by early 2010.
Other points in the Rio program include an increase in the post-tax synergy target for the Alcan acquisition to $US940 million a year by the end of 2009, up from $US600 million, and assurances that Rio could boost its output of iron ore and copper.
Previously the company identified packaging and energy units as divestment opportunities.
Now it has added to that a handful of other assets including an engineered products operation; a stake in Cortez, a US gold business; a zinc, lead and silver mine in the US; the talc unit; Northparkes copper and gold mine in Australia; and two non-operational uranium projects.
A few hours before the briefing in London, BHP, Rio the Australian Government and the Chinese Government received something they didn't really want.
Someone hinted that China's massive sovereign investment fund, China Investment Corporation (CIC) might be interesting in becoming a 'white knight' or somehow involved in a bid for Rio.
A move like that would set off alarm bells in Australia, the US, Europe and would be a counter productive move.
That's why the rumour, which first surfaced in a Chinese business newspaper yesterday morning, was put down yesterday afternoon.
CIC denied the report that it is considering teaming up with major steel producers to counter offer about $US200 billion for Rio
Besides the absurdity of the very high price (well above what BHP has suggested) it was a story that suggested that China was using its huge wealth to intervene in a western corporate situation on a particular side.
According to Bloomberg, a CIC press officer denied the report. Spokesmen for the steelmakers said they were unaware of any proposal.
The deal would send the wrong message if true to BHP Billiton, which is an important company for China. It would also terrify steel producers in Japan and South Korea who are important customers of Rio. It would also make the International Iron and Institute, which has voiced opposition to the BHP move on Rio, even more paranoid.
But more importantly a move on Rio would send the wrong message to the US and Europe, both of which are becoming more concerned at China's strong trade position and its reluctance to allow its currency to float more freely.
The European and US competition bodies would be sceptical of a China-Rio linking, more so than a BHP-Rio linking because of the involvement of the Chinese Government's wealth fund.
So for all these reasons it's no wonder it's been denied.
And it also took attention away from Rio before the first shot in its counter attack against BHP's offer.
Rio's share price went mad in Australia yesterday on the rumour.
It finished $9.60 higher at $138 after touching a day's high of $139.20. That's still a long way from a the all time high of $149.99 reached in the mad days after the BHP move was forced out of the company by British regulators.
BHP shares rose $1.84 to $42.11 after touching $42.46. That was on hopes by some investors that BHP's move on Rio would
