Rio Tinto Executive Says BHP Iron Ore JV Synergies Could Rise

Rio Tinto Ltd. (RTP) Iron Ore Chief Executive Sam Walsh said Monday estimates of synergies from a planned iron ore joint venture with BHP Billiton Ltd. (BHP.AU) could rise as the pair share more information.

The two miners have said they expect potential synergies of more than US$10 billion from bringing together their businesses in the Pilbara region of Western Australia and Walsh said that, once regulatory approval is received, they will be able to make a more detailed study of potential savings.

"I suspect that when we are able to jump the fence and we are able to look at the synergies that they have been tracking and developing versus the ones that we have been developing, there will in fact be greater opportunity than we originally thought," he told an investor briefing in Sydney.

Walsh said the iron ore market is expected to remain tight and that the outlook was positive for miners in the next round of annual price negotiations with steelmakers.

The iron ore pricing system is evolving, Walsh said, and Rio Tinto needs to speak directly to Baosteel and the China Iron & Steel Association to understand what the Chinese are seeking.

Rio Tinto Chief Executive Tom Albanese told the same investor briefing that there are opportunities in the development of coal projects in Mongolia.

Coal from Mongolia could end up being sold into the seaborne markets in China and could attract seaborne prices, Albanese said.

"From my perspective this is a place we need to be investing," he said.

Albanese said Rio already has investments in coal in Mongolia through its stake in Ivanhoe Mines Ltd. (IVN) and through its own coal exploration ground.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com

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