Anglo-Australian mining company Rio Tinto (RIO) made a $3.5 billion bid for Riversdale Mining (RFLMF).
The offer values Riversdale at about A$15 a share, Reuters reported. That's a 6% premium on Riversdale's close on Dec. 3. The shares rose today to A$16.31 each.
"While discussions with Rio Tinto are ongoing, there is no certainty that Rio Tinto or any other party will proceed with any proposal for the acquisition of Riversdale," Riversdale said.
Riversdale controls hard coking-coal projects in Mozambique that could eventually supply as much as 10% of the global market. Hard coking-coal is used to make steel.
The offer from Rio Tinto could spark a bidding war, with companies such as Vale (VALE) and Tata Steel among the potential suitors.
"It's in a good part of the world for accessibility, and we think there's plenty of further upside for whoever's interested in buying it. Hopefully there will be other interested suitors coming to the table," said Clive Donner, managing director of Australian investment firm LinQ.
LinQ is the fourth-largest shareholder in Riversdale.