Alcoa's Rio Tinto purchase strategic
Aluminum giant Alcoa and a Chinese partner have bought up large stake in Britain's Rio Tinto. The buyers say they don't want to purchase the whole company. Stephen Beard reports the move is mostly strategic.
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Doug Krizner: A big mining story out of Europe. Aluminum giant Alcoa and a Chinese partner have snapped up a large stake in Britain's Rio Tinto. As Stephen Beard reports from London, this move is more strategic than anything else.
Stephen Beard: The state-owned Aluminum Corporation of China and its American ally have together bought a 12 percent stake in Rio Tinto. It cost them $14 billion.
They insist they don't want to buy the whole company. Analysts say this is clearly a spoiling move.
Justin Urquart-Stewart of Seven Investment says the Chinese are especially keen to prevent the takeover of Rio by the world's biggest mining company, BHP:
Justin Urquart-Stewart: They are very concerned about the potential linkage of these two companies because of the amount of control they will have over strategic and key resources which the Chinese need.
Iron ore in particular. If BHP gets its hands on Rio, the combined group would control one-third of the global iron ore market.
Investors don't expect the blocking move by the Chinese and the Americans to spell the end of the takeover bid, however. Rio's share price shot up 16 percent this morning.
In London, this is Stephen Beard for Marketplace.
