Case ID: HKU826     Solution ID: 34442

Rio Tinto Case Solution

Abstract

In the arranged year 2005/2006, Brazilian iron mineral titan Vale, arranged a 71% cost increment with its Chinese clients. For the same period, Australian BHP requested a premium mirroring the cargo cost differentials between delivery iron metal to China from Australia versus Brazil. This interest was later dropped because of solid resistance from Chinese steelmakers. In the arranged year 2007/2008, after cost increments of 65-71% arranged by Vale, the other Australian Iron mineral titan, Rio Tinto, requested and acquired a premium that saw the aggregate increment in costs reach 200% from the earlier year. This case investigations the inspirations driving these value arrangements in the light of BHP's planned unfriendly takeover of Rio Tinto, which would result not just in a consolidated piece of the overall industry of right around 40% in the creation of exchanged iron mineral however a restraining infrastructure in the supply of Australian iron metals. This case can be utilized as a part of business classes, transaction and system as will give understudies diverse parts of the arrangement process. Issues, for example, threatening takeovers, estimating, piece of the overall industry and business relations are talked about for this situation.


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