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RIO Tinto - Looking For Coal in its Stocking

|Includes: Cleveland-Cliffs, Inc. (CLF)
Some news on Rio out yesterday:

Anglo-Australian Rio Tinto has signalled it's back on the acquisition trail after coal miner Riversdale Mining LTD confirmed the global miner has made an indicative A$3.5 billion (US$3.46 billion) takeover offer. Riversdale confirmed on Monday the $15 a share indicative offer.

 
Rio's move on Australia's Riversdale is likely to spark a bidding war, as the company has hard coking-coal projects in Mozambique that could eventually supply 5-10 percent of the global market for the key steel-making material.  Brazil's Vale (VALE5.SA) is seen by some analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique. India's Tata Steel (TISC.BO), Riversdale's top shareholder, was also seen as a potential bidder.  Tata said it regarded its Riversdale stake as a strategic investment. "Tata Steel will continue to monitor the situation and will take appropriate action as deemed necessary," the company said.

Okay, so what do we have - an ore producer looking to get bigger in the met coal space.  Wonder why that is?  Could it be the additional leverage the company would have over the steel producers?  Anyone remember Cliffs (NYSE:CLF) trying to buy Alpha Natural (ANR) back in July 2008?  Harbinger Capital screwed it up - they were ahead of their time.  I still think Cliffs will find another mining partner on their dance card.  Or be asked to dance.

CLF  (Baa3/BBB-) 4.80 '20 +193/10yr
RIOLN (A3/BBB+) 1.875  11/15  +82/5YR 

Still think CLF has some value.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.