There are more Chinese rumblings on Rio.
Speculation of a Chinese interloper has been rife since BHP Billiton last month launched a £69bn takeover attempt for Rio Tinto, creating the prospect of one company controlling just under 40 per cent of the world’s seaborne iron ore – an outcome that would be distinctly unappealing for the resources-hungry Chinese.
But after reports that sovereign wealth fund China Investment Corporation (CIC) was looking to join with other Chinese steelmakers on a bid were denied, is one of those parties making a more definite declaration of interest?
Baosteel, China’s largest steelmaker, is considering a counterbid for Rio, its chairman Xu Lejiang has apparently declared.
The 21st Century Business Herald reported (via Reuters) that the Baosteel chairman said in an interview: “We are considering (a bid). The possibility of a takeover plan going ahead is very big,”, adding that it was important for the firm to have its own mines.
Baosteel has a market value of just $35bn-odd and would likely require help from its compatriots in mounting a challenge for Rio.
Asked about the size of a possible deal, reports Reuters, Mr Xu said that “200 billion is probably not enough.”
The sheer size of a Rio counterbid, as well as doubts about the ability or desire of Chinese companies to band together to work in concert on a large buy, means rumours of a Chinese run at Rio have been met with deep scepticism.
But that’s not stopping the flow of stories – and subsequent backtracking. Bloomberg also on Tuesday was reporting the latest iteration of the Chinese bid tale – reporting a director at Shougang, China’s ninth largest steel mill, as saying that “top level officials” were discussing a joint bid.
This dish still comes with a hearty pinch of MSG.