The quest for Rio Tinto
In the potential deal's latest iteration, Blackstone
According to the Telegraph's disputed version, Blackstone's plan would be to acquire the big company before spinning off its iron ore operations and newly acquired aluminum producer Alcan. The paper said Blackstone believes the iron ore entity to be worth as much as $110 billion. Rio Tinto paid $37 billion in cash to snatch Alcan from the jaws of its Pittsburgh-based former sibling and suitor, Alcoa
Clearly, much of the reason that Chinese interests continue to be linked with a Rio Tinto acquisition is concern in that country that supplies needed to fill its growing demand for iron ore could be compromised by an acquisition of the company. But no matter how you slice it, there appears to be a reasonable likelihood of some sort of deal involving Rio Tinto. In fact, prior to its own offer, it was rumored that BHP was planning a joint bid for Rio Tinto with Brazil's Vale
I've frequently preached to my Foolish friends about the significance of the global supply demand picture in energy. And while that picture is indeed important for us all, concern about the ultimate disposition of Rio Tinto indicates that there's a similar picture developing for a number of resources, certainly including iron ore.
On that basis alone, I urge Fools to keep a close eye on the resource companies mentioned above -- and I'd also include U.S. copper, molybdenum, and gold producer Freeport-McMoRan
For related Foolishness:
Fool contributor David Lee Smith has no plans to bid for Rio Tinto. He doesn't own shares in any of the companies mentioned, but he does welcome your questions or comments. The Fool has a carefully mined disclosure policy.