Rio Tinto (RTP) Up .... $103!

I have been debating whether to add any of the "big 3" miners - CVRD (RIO), Rio Tinto (RTP), or BHP Billiton (BHP) to the portfolio. I got a little exposure to the space earlier this week through the very heavy weighting of CVRD in iShares Brazil (EWZ), but it looks like a powerhouse mining company could be created as today BHP Billiton is bidding to buy Rio Tinto in a massive takeover. I am surprised that this would pass world anti-trust regulations as the amount of metal/mining these 2 companies would control would be enormous but this is the initial news and thus far Rio Tinto is spurring the offer. Remember, each time these commodities go up in price, the 'worth' of the 'reserves' in the mines only goes up.

• Thursday investors in Rio Tinto finaly sent the Anglo-Australian miner soaring after its larger rival BHP Billiton announced it had tried to buy the company.
• Shares in Rio Tinto (RTP) shot up 29.4%, or £15.20 ($32.02), to £56.29 ($118.58), on Thursday afternoon in London after it said it had rejected the all-share bid as too low. "The boards of Rio Tinto have given the proposal careful consideration and concluded that it significantly undervalues Rio Tinto and its prospects," the world's third-biggest miner said in a statement.
• With a market capitalization of $136 billion, BHP Billiton (BHP) is already the world's largest mining concern, and a combination with Rio Tinto, which has a market cap of $80 billion, would create a commodities behemoth.
• Rumors had circulated earlier this year that a private equity company might try tilting at either of the two companies to exploit the booming demand for commodities from rapidly industrializing China and India. But with the current credit crisis, no private equity firm would now want to be saddled with the debt of such a huge acquisition.
• "In preparing its proposal, BHP Billiton has examined in detail the regulatory issues and other practicalities of a combination," BHP said in its statement. "There can be no assurance that any transaction or offer will result from BHP Billiton's proposal."
• A bid from BHP Billiton for Rio Tinto has always looked compelling because of the synergies that could be achieved from the two companies' existing joint ventures.
• BHP's dual listing on the Australian and London stock exchanges, along with it being partly based in Australia, would also stand it in good stead with the Australian government--a takeover of Rio would see it gain control of its huge iron ore operations in Pilbara, Western Australia. Rio derives about 40% of its earnings from the mines there.

What a massive offer but with the huge cash flows these companies are producing, this money needs to go somewhere. Times are good in the mining area. Now it will be interested to see if BHP Billiton continues raising the stakes and bidding higher - I can only assume at these prices they are only bidding against themselves. Again, as I stated above, this should have serious world regulatory issues as combining the #1 and #3 mining companies in the world should cause some concerns - together they would control 1/3rd of the world's iron ore according to CBSMarketwatch.

Long CVRD thru iShares Brazil; no personal positions