Mumbai: Global mining giant Rio Tinto will invest $1.1 billion to expand mines in Australia and the United States to ward off an unwanted approach from rival BHP Billiton.

While Rio would spend $793 million as its 80-per cent share of the cost to extend the Kestrel coal mine in Australia, it would invest another $300 million to develop Eagle, a high-grade nickel and copper mine in Michigan, United States.

The US mine is projected to produce 16,000 tonnes of nickel per year over seven years until 2016.

Rio is also in the final stages of negotiating a contract to develop a nickel mine at Sulawesi in Indonesia, where it expects initial production of 46,000 tonnes per year beginning 2015.

After the Alcan acquisition, Rio is looking at more toward organic growth. Rio Tinto has spent $44 billion on new projects, including its $38.1 billion acquisition of Alcan in October, so far this year.

Rio is the subject of an unsolicited $120 billion takeover proposal from rival BHP Billiton Ltd/Plc.

The takeover bid for Rio would not only involve a bid for a dual listed company, but it would also be made by a DLC. That would involve two separate bids by two separate bidders - by BHP Billiton Plc for Rio Tinto Plc and by BHP Billiton Ltd  for Rio Tinto Ltd  in two separate legal jurisdictions - the UK and Australia. Each bid would have to comply with the applicable takeover laws.

Moreover, because Rio has ADRs listed in the US and 20 per cent of the group is held by US investors, the bid would also need to be SEC-compliant.

In the UK an offer can only remain open for a maximum of 60 days and a bid cannot be increased in the final two weeks. A bidder must also obtain at least 50 per cent of its target or the bid will fail.
 
In Australia, however, a takeover bid can remain open for a maximum of 12 months and a bid can be unconditional at any level, which means that a bidder can emerge with less than 50 per cent of its target.

A bid for Rio will require the approval of various competition watchdogs throughout the world, which would be likely to require considerably longer than 60 days.