Baosteel Chairman Floats Rio Tinto Counterbid

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Includes: BHP, RIO
by: SA Eli Hoffmann

Shares of global miner Rio Tinto (RTP) were up 0.5% in London trading after the chairman of Baosteel, China's number-one steelmaker, Lejiang Xu, reportedly told the 21st Business Herald website the group was considering a bid to rival the $128 billion offer of BHP Billiton (NYSE:BHP). "We're thinking about it," the newspaper quoted Xu as saying. "There is a strong possibility we would make a bid." A bid by state-owned Baosteel and other steelmakers would require government backing. Baosteel spokesman Meng Haibiao said he had no comment on the report. Chinese steelmakers have protested the bid, contending a merger would give the combined entity too much influence over global iron ore supplies and pricing. China is the world's biggest steel producer and consumer. Earlier reports put the size of a potential Chinese bid at $200 billion. "I'm afraid $200 billion wouldn't be enough," the 21st Century Business Herald quoted Xu as saying. Separately, China's Shougang Corp. denied it was part of a consortium which included the Chinese government that was looking at counter bidding for Rio Tinto. China's government investment fund has repeatedly rejected rumors that have it partnering with the country's steelmakers to counterbid for Rio Tinto.

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