BHP details Rio Tinto merger savings

BHP Billiton Ltd., the world's largest miner, unveiled Monday the cost cuts and profits it said it would achieve through its proposed takeover of rival Rio Tinto Ltd.

Rio Tinto last week rejected BHP Billiton's 3-for-1 share offer calculated to be worth as much as $149 billion.

BHP Billiton's justification of the deal — which it said would achieve $3.7 billion in savings and earnings — wasn't accompanied by any increase in the offer. In its statement to the Australian Securities Exchange, it said the deal is the most logical and compelling consolidation opportunity for both companies.

"The two companies each have portfolios of large-scale, low-cost, long-life assets that are highly complementary and, when combined, would be without peer," BHP Billiton said.

Alex Passmore, a mining analyst with Perth-based broker Patersons Securities, said BHP Billiton's statement Monday would do little to change Rio Tinto's mind about the offer.

"I think given the synergies that they have outlined, Rio will want more," he said.

BHP Billiton said its offer valued Rio Tinto at $153 billion, representing a 25 percent premium, based on closing prices on Oct. 31.

The miner said bringing together the two Anglo-Australian resources giants would deliver unique opportunities for value creation, including more efficient development of their twin iron ore operations in the Pilbara region in Western Australia state and the streamlining of Australian coal operations, where output is currently crimped by infrastructure bottlenecks.

BHP Billiton and Rio Tinto are both upgrading port and rail facilities at their Pilbara iron ore projects, and UBS analysts said bringing the companies together would deliver significant savings as it would stop duplication of capital expenditure at these operations.

In London trade, Rio Tinto stocks were up less than a percent to close at 5,658 pence ($118.29). BHP Billiton's London-listed shares were down 1.29 percent at 1,607 pence ($33.60).