Daily Business News Mongolia

Bloomberg reports that,

By Brett Foley

Aug. 26 (Bloomberg) — BHP Billiton Ltd., bidding $142 billion for Rio Tinto Group in the world’s largest mining takeover, said its target may have to lower growth forecasts because of delays to projects.

Development of the Coega aluminum smelter has been deferred by a power shortage in South Africa. London-based Rio said Aug. 1 the president of Guinea wrote to the company “purporting to rescind” a mining concession for its $6 billion Simandou iron ore project. Rio is still negotiating with Mongolia on the share of profits from the Oyu Tolgoi copper and gold mine.

Those projects have been “substantially delayed or may disappear completely,” BHP Chief Commercial Officer Alberto Calderon said today in a telephone interview from London. “They have spoken about their strong growth in the near term, but I think they may need to revise those forecasts at some stage.”

Rio says shareholders stand to benefit the most from its expansion plans as an independent company and it forecasts a compound annual growth rate for production volume of 8.6 percent until 2015. Chief Executive Officer Tom Albanese in February rejected BHP’s sweetened bid of 3.4 shares for each of Rio share as too low.

The diversity of projects in its portfolio means Rio can still achieve its forecasts, Albanese told reporters in London today during a presentation. About 70 percent of its forecast growth to 2015 will come from so-called “brownfield” expansions, or the enlargement of existing operations, he said.

“We remain comfortable with that number,” Albanese said. Some projects “have moved back, some have moved forward. We see no meaningful difference up or down from where we sit today.”

Buying Rio would enable Melbourne-based BHP to vie with Brazil’s Cia. Vale do Rio Doce as the world’s biggest iron ore company and become the largest producer or copper, aluminum and coal used by power stations.

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