Watch Rio Tinto (RIO) shares shake off their BHP-induced weakness from yesterday and jump after renewed speculation overnight that the aggressive Glencore was still stalking the company.
US quoted depositary shares in Rio surged 20% overnight in New York trading after Bloomberg reported that Glencore PLC had talked to Rio’s biggest shareholder, Chinalco, about a possible deal.
State-owned Chinalco, or Aluminum Corp. of China owns about 12.9% of Rio which it picked up several years ago in the wake of the refinancing of the rotten $US44 billion takeover of Alcan which just about crippled Rio Tinto.
There’s increasing talk Glencore wants Rio so that it can get into the iron ore industry – a boom Glencore humiliatingly missed as it took over the linked Xstrata in 2012.
Any deal would cost Glencore more than $US160 billion, and would require approvals in Europe, Australia, the US, Japan and China. Linking with state-owned Chinalco is seen as a way for Glencore to try and get the inside running for approval for the deal in Rio’s biggest market.
Chinalco is being seen as an unhappy Rio shareholder given it failed to get a board seat and the huge Simandou iron ore project has been swamped by the slide in prices and growing global iron ore surplus.
On top of that, the Ebola outbreak in West Africa has made it all but impossible to start preliminary work because of a shortage of staff.
Rio shares ended up more than 9% in US trading at $US51.47, or more than $A58.70. Rio Tinto shares were down 2.1% at $57.59 in Australia on Monday at the close.
