BHP Billiton, the world's top miner, said it sees no need to sell assets to win regulatory approval for its $170 billion takeover of rival Rio Tinto, but did not rule out that it might have to.
Chief Executive Marius Kloppers also said on Thursday his company had not held talks with any Chinese entity about buying a stake in BHP. If it had, he added, it would have had to disclose the discussions to the market.
BHP will send its takeover offer to Rio shareholders only after it has been cleared by anti-trust regulators in Europe, Australia, the United States, Canada and South Africa, expected later this year.
It filed its application to the European Commission, which it considers one of the three key regulators on the bid, on May 30. The EC will say by July 4 whether it will approve the deal, open an in-depth investigation, or permit a short extension.
We clearly have every expectation that we're going to go into a second phase review here, Kloppers told reporters in Melbourne, following a business lunch.
Asked whether he could state categorically that BHP offered no remedies to the European Commission, Kloppers declined to rule anything out, saying BHP was at the beginning of the anti-trust review.
We've always maintained that there's no economic harm -- there's economic benefit -- particularly in the product that is probably likely to be examined most closely, iron ore, he said.
We have very clear plans, which have been detailed, that we want to expand that product more quickly, and hence our contention right from the start, as it is now, is that there is no remedy required.
Kloppers said he expected the EC, the U.S. Department of Justice and Australia's Competition and Consumer Commission to be the main regulators it would have to satisfy.
BHP's bid for smaller rival Rio Tinto has prompted concerns in China that a merged entity would have too much clout in pricing many of the commodities China needs to fuel its rapid industrial growth.
Asked about an Australian media report last month that a Chinese firm wanted to make an investment in BHP Billiton, Kloppers said there had been no discussions with any Chinese entity. We clearly have not spoken to anybody, he said.
Kloppers noted regulators in Asian countries did not have to approve a deal before the offer goes to Rio shareholders.
Kloppers spoke to reporters after outlining BHP's growth potential relative to Rio's.
Rio Tinto in February rejected BHP's offer of 3.4 BHP Billiton shares for each Rio share as too low. It has repeatedly said BHP needs Rio more than Rio needs BHP.
BHP is targeting 6.9 percent annual production growth over the next five years, lower than Rio's forecast for 8.6 percent until 2015, but Kloppers said BHP's growth would come from some of its highest-margin businesses and projects with lower risk because they involved expanding existing mines.
Much of our growth is focused on the highest margin businesses in which we have a clear advantage, Kloppers said.
Petroleum was BHP's most profitable business in 2007, with a margin of 75 percent. Iron ore had a profit margin of 52 percent.
Kloppers said BHP would give an update late this year on development of its huge Olympic Dam mine in Australia, where it plans a phased expansion to 730,000 tonnes a year of copper and 19,000 tonnes a year of uranium, more than four times its current capacity.
Olympic Dam is one of the world's largest copper and uranium deposits.
In presentations last week, Rio Tinto highlighted medium- to long-term growth opportunities in places like Mongolia, Guinea and Peru.
Kloppers said that while Rio Tinto might have assets with big reserves, it remained to be seen whether they could be developed profitably, in light of issues such as their location, the cost of infrastructure and political risk.
A great minerals resource does not necessarily translate into a great profit opportunity, he said.
BHP shares closed down 4.4 percent at A$42.50 and Rio shed 3.8 percent to A$134.95. Both were hit as the market reacted to falls in the price of crude oil and gold ($1=A$1.04) (Editing by Jonathan Standing & Ian Geoghegan)
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