Rivalry boosts Rio's respect for Kloppers

Friday, Feb 18, 2011
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RIO Tinto chief executive Tom Albanese says there is greater respect between his company and arch-rival BHP Billiton despite the failure of over two years of negotiations to conclude any transactions between the global mining giants.


In an interview with the deal, Mr Albanese said months of negotiations last year over plans to merge the huge Pilbara region iron ore mines, railways and ports of BHP and Rio had further developed "what was some strong mutual respect between the organisations and between individuals too".


He said his relationship with BHP chief executive Marius Kloppers had always been good despite Rio's vehement rejection of a hostile takeover bid from its rival, which was abandoned in November 2008.


"People call it a hostile takeover and a hostile defence. In reality it was just business," Mr Albanese says.


"Marius is a tough guy, I understand that. But through the whole thing we did not drag either of us into the mud. We stayed with the business, we stayed away from the personal. Fortunately, we both respected the business versus the personal -- we stayed away from that patch."


And while the Australian Competition & Consumer Commission had previously cleared BHP's hostile bid for Rio, it subsequently issued a statement of issues concerning the proposed tie-up in the Pilbara.


Regulatory issues are likely to make any deal between the two companies problematic in the future, a fact that has led them to focus on other acquisitions and capital management.


Rio last week announced a $US5 billion buyback after reporting a record $US14.32bn annual profit -- in line with expectations -- and cashflow of $US23.5bn.


It has also made a $3.9bn friendly takeover of Riversdale Mining, which owns coking coal projects in Mozambique.


On Wednesday, BHP flagged an extra $US5.8bn of share buybacks over the remainder of the year, taking to $US10bn the value of buyback commitments made since November.


BHP revealed it also intended to spend $US80bn on new resource developments over the next five years after posting an Australian record interim net profit of $US10.52bn, up 72 per cent from a year earlier.

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