Rio Is Unlikely to Bid for Potash Corp., UBS Says, Citing Albanese Meeting

Rio Tinto Group, the world’s third- largest mining company, is unlikely to make a takeover bid for Potash Corp. of Saskatchewan Inc., UBS AG said after meeting with Chief Executive Officer Tom Albanese.

“A bid or even a joint bid for Potash Corp., as alluded to in the press, is far from happening,” UBS analysts led by Olivia Ker and Glyn Lawcock said in a report dated yesterday. The company is focused on growth by expansion and acquisitions of a “small-to-moderate” size, Ker said, citing Albanese.

Rio and a Chinese partner may be considering a bid for Potash Corp. to rival BHP Billiton Ltd.’s $40 billion offer, the Globe and Mail reported yesterday, citing unidentified people. Potash Corp., the world’s biggest fertilizer maker, this week said it began talks with other companies after rejecting BHP’s cash bid of $130 a share.

Rio’s “focus in the near term appears to be resurrecting the growth projects that were curtailed during the last two years,” UBS said. This may include the underground expansion of the Argyle diamond mine, aluminum smelter refurbishments, expanding its iron ore operations and developing Oyu Tolgoi copper mine in Mongolia, the report said.

A proposed iron ore joint venture that BHP and Rio are seeking regulatory approval for is “still worth chasing,” the report said, citing Albanese. The expiry date of July 31 for the venture proposal may be extended by mutual consent, the brokerage said.

“Chances of success are reducing though in our view,” UBS said.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

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