Baosteel mulls Rio Tinto bid

Baosteel, China's largest steel manufacturer, may lead a number of mainland steelmakers to challenge BHP Billiton's takeover bid for Rio Tinto, the South China Morning Post reported. BHP had previously offered US$134 billion for Rio Tinto, and the deal was expected to go through. But with iron ore prices, which have doubled since 2005, projected to surge as much as 50% next year, Baosteel and other mainland companies fear a BHP takeover would raise prices even higher for the crucial raw material. Analysts expect a domestic bid to be approved by the government, which may begin to take a more active role. "A few of the biggest steelmakers in China and the central government may team up for a bid," according to Chen Hanyu, director of Shougang Iron and Steel, the country's sixth-largest steel company.