Rio Tinto bids for Australia’s North Ltd.

British mining giant Rio Tinto (RTP-N) has launched a hostile US$1.7-billion takeover bid for diversified Australian miner North Limited.

Rio Tinto is offering A$3.80 in cash per North share, with the deal being contingent on the acquisition of at least a majority stake in the company. Rio Tinto has already bought a 14.5% stake in North at A$3.80, thus becoming the company’s largest shareholder.

North management described the offer as being “totally inadequate” and advised its shareholders not to take any immediate action in relation to the offer.

The primary target of the takeover is North’s iron ore mining operations in Australia’s Pilbara region, near Rio Tinto’s own iron ore mines.

“By combining our companies’ iron ore businesses in Western Australia, we will become the world’s second-largest producer with diversified resources, products and markets,” says Rio Tinto Chief Executive Officer Leigh Clifford. “The bid strengthens the Australian iron ore mining industry and export base in the face of increasing global competition.”

Elsewhere in Australia, North holds uranium, copper-gold and wood-fibre assets.

From a Canadian perspective, the deal, if successful, will have its greatest impact in Labrador and eastern Quebec, where North is 56.1% owner and operator of Iron Ore Co. of Canada (IOC), Canada’s largest iron ore producer.

IOC operates a mine, concentrator and iron ore pellet-making plant at Labrador City, Labrador, as well as port facilities at Sept-les on the Gulf of St. Lawrence in Quebec. The company runs a 420-km rail link connecting mine to port. The remainder of IOC is held by Japan’s Mitsubishi, with 25%, the Labrador Iron Ore Royalty Income Fund (LIF.UN-T), with 12%, and Dofasco (DFS-T), with 6.9%.

Another fallout of the takeover could be the sale of North’s 25% stake in the Alumbrera gold-copper mine in Argentina. The remaining interests are held by MIM Holdings of Australia and Canada’s Rio Algom (ROM-T).