Australia gives green light to Rio's Riversdale bid

SYDNEY: Australian authorities on Friday approved Rio Tinto's $3.9 billion offer to buy miner Riversdale, clearing the main regulatory obstacle for the deal to go ahead.

The Treasurer's agreement means the offer must now be approved by a majority of Riversdale's shareholders, who include India's Tata Steel and Brazil's SID.

Rio Tinto's bid last month led to speculation of a bidding war between it and rivals as they scramble to take advantage of Australian firm Riversdale's huge steel-making coal in Mozambique.

Industry analysts say the African country will be the second-largest producer of coking coal within the next 15 years, behind Australia, according to Dow Jones Newswires.

When it made the offer Rio said it already had Riversdale's directors on board and they had agreed to its Aus$16 ($16) share valuation.

A consortium of five Indian state-run companies -- International Coal Ventures -- has previously shown interest in Riversdale and is mulling an offer, India's Economic Times reported last month.

Brazilian giant Vale, which already has significant interests neighbouring Riversdale's Mozambique tenements, has also been named as a possible suitor.

The bid is Anglo-Australian giant Rio's first attempted acquisition since the collapse of a huge iron ore tie-up with rival BHP Billiton in October.

Its last big buy, the 2007 takeover of Canada's Alcan, was expensive and hugely unpopular.