Tata Steel, ICVL escape Rio Tinto's blunder in Mozambique
22 January 2013
Tata Steel and International Coal Ventures Ltd (ICVL) could consider themselves lucky for not having tabled a counter-bid for Riversdale Mining, since Rio Tinto, which acquired the Mozambique-focused coking and thermal coal miner had to last week write off $3 billion on the highly flawed 2011 acquisition.
Rio Tinto, the world's third-largest mining company, had to force its CEO Tom Albanese and Doug Ritchie, who led the acquisition and integration of Riversdale Mining, to step down after the London-based miner wrote off little more than 75 per cent of the acquistion value. (See: Rio Tinto CEO quits after $14-bn write-down)
Giving reasons for the massive write-off, the company said, ''In Mozambique, the impairment was due to infrastructure constraints to support the acquired coal assets, which were more challenging than originally anticipated, and the downward revision of recoverable coking coal reserves.''
Although the company had also to write off $11 billion on its alluminium assets due to its 2007 ill-timed acquisition of Canadian alluminium giant Alcan, (again under the tenure of Albanese) both Albanese and Ritchie were shown the door as they were held accountable for the extremely faulty due diligence conducted in the Riversdale acquisition, although the company had the specialist in the industry.
In December 2010, the Anglo-Australian miner had formally launched an A$3.9 billion ($4.1 billion) bid for Australian coal miner Riversdale Mining, in order to gain control of 13 billion tonnes of coking and thermal coal in Mozambique.
Its offer, which was contingent on acceptance from half of Riversdale's shareholders, had been hiked by A$1 to $16 per share from its earlier informal offer of A$15 a share.