RPT-COLUMN-Glencore-Rio proposal not the right iron ore deal:Russell

martes 7 de octubre de 2014 20:01 GYT

(Repeats with no changes to text) Clyde Russell is a Reuters columnist. The views expressed are his own.

By Clyde Russell LONDON, Oct 7 (Reuters) - The hullabaloo surrounding Glencore Plc's spurned approach to rival miner Rio Tinto shows why this is probably the wrong deal at the right time.

Glencore's proposal to create a $160 billion behemoth is certainly audacious, and may even make sense for shareholders of both companies if priced attractively.

But even if it were successful, such a deal would do little resolve the key problems bedevilling the outlook for many commodity markets, and the companies that produce those resources.

The logic of Glencore taking control of Rio Tinto would be for the former to get access to the latter's iron ore operations in Australia, which are the lowest cost among major producers.

Iron ore is the missing arrow in Glencore's quiver, and the assumption behind a deal would be that the Swiss-based company would be able to use its trading nous to extract more value from the well-run Rio Tinto mines.

Assuming that all the anti-trust and other regulatory obstacles could be overcome, and that Rio Tinto shareholders could be won over, then the potential for the deal to be rewarding for Glencore is compelling.

However, the emphatic rejection of the approach by Rio Tinto's board likely means that Glencore will be unable to get a low-ball offer accepted, meaning it either has to pay more money for Rio or go hostile.   Continuación...