Global miner Rio Tinto Ltd/Plc said it was on the verge of exploiting the world's next giant iron ore deposit, in Africa, as it continued to reject a more than $180 billion takeover bid by bigger rival BHP Billiton Ltd/Plc
Chief Executive Tom Albanese's comments, detailing growth projects that will underpin its forecast for near double-digit growth for the next seven years, were Rio's latest defence against BHP's hostile offer made in February.
Albanese said Rio expected to begin producing iron ore in 2013 from its Simandou project in Guinea, where it has identified 2.25 billion tonnes of iron ore resources, and sees that as only a small part of the total range.
Simandou is, without doubt, the top undeveloped tier-one iron ore asset in the world, Albanese told reporters, adding the ore was among the highest grade, lowest impurity material in the world.
This is material that is very, very sought after in the market today, and we expect it to be sought after in the market in the future, he said.
Albanese declined to comment on whether Rio Tinto would recruit Chinese partners for the project.
He said more generally that Rio would look for partners, including possibly Chinese state-owned enterprises, on projects where they could add value, either by contributing capital, technological skills or providing market access.
Albanese reiterated Rio's January forecast for output growth of 8.6 percent a year through to 2015, and said the company was well placed to take advantage of an expected doubling of world demand for metals and minerals by 2022.
Rio also released new estimates for its La Granja project in Peru, where it had identified 2.77 billion tonnes of inferred copper resources at 0.51 percent copper and 0.1 percent zinc.
Rio's copper group chief, Bret Clayton, said the results showed La Granja, formerly owned by BHP Billiton and bought by Rio Tinto for $24 million, was one of the largest undeveloped copper projects in Latin America.
Rio said its U.S. Resolution project in Arizona had 1.34 billion tonnes of resources containing 1.51 percent copper and 0.04 percent molybdenum.
Rio's Australian-listed shares ended up 2.4 percent at A$144.37 ahead of the announcements -- 8 percent below the implied value of BHP's offer of 3.4 BHP shares for each Rio share. Rio's shares in London rose 1.9 percent, and were also trading 8 percent below the implied value of the offer.
Two fund managers said there was little in the presentations that would make them change their views on the company, given Rio was sticking to its forecast for growth through to 2015.
Really, the focus is now on the submissions for the competition authorities, said one fund manager who declined to be identified.
Albanese attributed Rio's share price discount to the fact that no offer will be sent formally to shareholders until the bid gets regulatory approvals, which BHP expects later this year.
There's a general recognition that given the process has some time to run, there's certainly some uncertainty associated with that, Albanese said.
Our focus is on creating shareholder value for Rio Tinto shareholders and focusing on what we believe is the strongest case for shareholder value -- that is continuing to run our company as an independent company that we believe is far superior to anything else we've seen. (Additional reporting by Ben Wilson, Editing by Ian Geoghegan)
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