BHP Says May Reconsider Rio Bid If Regulators Intervene

MELBOURNE, Sep 24, 2008 (Dow Jones Commodities News via Comtex) -- BHP said Wednesday that if regulators force divestments that affect the rationale of its bid for Rio Tinto Ltd. (RTP), it could be forced to reconsider the deal. Steelmakers have raised concerns that a combined BHP/Rio would have too much power to influence iron ore prices but BHP Chief Executive Marius Kloppers said BHP believes bringing the two together will actually benefit customers by bringing on new sources of supply quicker. "We feel very confident that our arguments about extra volume out of the combination, that that is a very sound one," Kloppers said in a video presentation sent to shareholders with the company's annual report. "But clearly, should we not be able to get the synergies and the extra volume out of the combination because of some of these issues, we'll have to think again." Kloppers said the timetable for the deal remains unchanged with regulatory approvals expected late in the fourth quarter, after which BHP will have 28 days to post an offer document followed by a two-month offer period. Rio Tinto has rejected the all-share bid, which it says significantly undervalues the company, but BHP Chairman Don Argus dismissed suggestions the bid is pitched too low. "We think we've created the value bid now, and it's a relative value bid that's on the table," he said. "I probably could run a different argument, with petroleum running pretty strongly at the moment, that probably it's overpriced." Kloppers said urbanization in China would continue to underpin demand for BHP's products and pointed out that, while there had been ups and downs, China's gross domestic product growth had averaged 8% over the past 30 years. "Our view is that, as the population industrializes, as they urbanize, we're just going to see another couple of decades of exactly the same thing - some ups and downs, strong long-term demand growth," he said. Nuclear power is going to play a growing role in meeting China's energy needs, Kloppers said, and BHP is actively positioning itself to take advantage of this trend. -Dow Jones Newswires