De Beers trumps Rio in bid war for Ashton Mining

South African diamond giant De Beers yesterday declared victory over the mining conglomerate Rio Tinto in the struggle to take over Ashton Mining, part-owner of the world's largest diamond producer.

South African diamond giant De Beers yesterday declared victory over the mining conglomerate Rio Tinto in the struggle to take over Ashton Mining, part-owner of the world's largest diamond producer.

Rio, which last week saw its offer of A$1.85 a share trumped by a new A$2.28 offer from De Beers, said yesterday it would not match the new offer. Dealers hoping to see Rio up the ante were disappointed as the news pushed Ashton shares down 11 cents to close at A$2.24.

Both Rio and De Beers had agreed to acquire a 19.9 per cent stake in Ashton, which controls 40 per cent of the Argyle mine in Western Australia from Malaysia Mining Corporation.

Rio, which already owns 60 per cent of Argyle, said yesterday that the De Beers bid remained conditional "on a number of matters" and said it would leave open its A$1.85 offer for the time being. Rio has already jumped through the regulatory hoops. The Ashton board is to recommend the new De Beers bid, which has leapt 45 per cent from its previous offer.

Yesterday Joan Braune, a spokeswoman for De Beers, said it expected to receive approval shortly from the Australian government's Foreign Investment Review Board. "They don't particularly know of De Beers because although we have been prospecting in Australia, we have never made an application to them before. We are confident we have a lot of value [to] bring to Argyle, particularly in our experience of underground mining," she said.

De Beers sees the investment as a way to expand its global base and further control the marketing of low-cost diamonds. In 1996 Ashton and Rio withdrew Argyle from the De Beers Central Selling Organisation.