Giant miner Rio Tinto looks at three $15b developments

RIO CEO Tom Albanese has left open the posibility of teaming up with Chinese partners on the miner's Simandou, Oyu Tolgoi and La Granja projects. The three mine developments - together worth around $15 billion - are central to Rio's defence against BHP Billiton's $170 billion hostile takeover bid. Mr Albanese's comments came amid rumours Brazil's Vale will charge Chinese steel mills more for iron ore to bring prices in line with those won by BHP and Rio earlier this year. In an interview with The Courier-Mail yesterday, Mr Albanese said Rio had been approached by "parties expressing interest" in the six months since he first flagged his desire to team up with Chinese partners on major projects. The miner is most likely to joint venture with China Inc on remote deposits that would benefit most from the economic giant's financial and political muscle. "We are very good at developing resources all over the world, but unfortunately they all seem to be in the middle of nowhere," joked London-based Albanese, who is in Australia to speak to investors and media. "It is on these projects that we might find opportunities where we can combine a more efficient infrastructure pathway." Asked if possible joint ventures included Simandou iron ore in Guinea, Oyu Tolgoi copper in Mongolia and La Granja copper in Peru, Mr Albanese responded that he would consider "anything that provides a positive, value-adding proposition for Rio shareholders." BHP chief commercial officer Alberto Calderon has previously derided the three far-flung projects as a "Santa Claus list" because of the difficulties associated with developing mines in such remote locations. BHP's 3.4-for-one all-share bid has been repeatedly rejected by Rio on the grounds that it significantly undervalues the long-term prospects of its business. The miner's offer is pre-conditional, meaning it must clear regulatory hurdles before the 81-day countdown on the bid starts running under British takeovers law. Mr Albanese made his comments shortly after industry journal Steel Business Briefing printed an e-mail reportedly sent by Vale to Chinese steel mills on Wednesday informing them iron ore prices would rise by 20 per cent from September 1. Vale posted a statement on its web site dimissing the news as "rumours circulating in the market" and refusing to confirm the price increase. The development marks a new twist in the battle between Brazil and Australia for global iron ore supremacy, amid seemingly insatiable Chinese hunger for the steel-making ingredient. And it has been interpreted as a sign of Vale's bullishness about the long-term outlook for iron ore demand, as the miner positions itself for next year's contract price negotiations with its Asian customers. Vale had negotiated a price rise with Chinese steel giant Baosteel of between 65 per cent and 71 per cent, depending on the grade of iron ore, for the year beginning April 1. But Rio and BHP subsequently bettered the deal by securing increases of 80 and 97 per cent, based on the cheaper cost of shipping the raw material to China from Australia compared with Brazil. Mr Albanese refused to comment on the Vale rumours. BHP spokeswoman Samantha Evans also declined to comment. Rio shares closed 93c lower to $111.59 yesterday, amid in line with falls in the resources sector. BHP lost 84c to $37.11. It was the second day of heavy selling in mining and energy stocks, amid market concerns the historic commodities bull run will be reined in by the US economic slowdown. ---Courier Mail