No wonder TATA aren't worried about the takeover bid - they are being looked after.
(Reuters) - Riversdale Mining (RIV.AX), which is developing coal mines in Mozambique, plans to negotiate longer-term coking and thermal coal pricing deals with its customers, bucking an industry trend of setting prices each quarter, Managing Director Steve Mallyon said.
"We aren't going to be entering into quarterly pricing," Mallyon told Reuters. "We want to enter into long-term arrangements, we feel that is the most appropriate way for us to do business."
Rio Tinto (RIO.AX)(RIO.L), which is offering $3.9 billion to acquire Riversdale, is "comfortable" with the pricing structure, Mallyon said.
Riversdale's board is recommending shareholders accept the offer.
BHP Billiton last year began shifting coking coal and iron ore sales to quarterly pricing based on indexed, or averaged, spot prices after arguing the system reflects market fundamentals better than the traditional annual price-fixing regime favoured by its customers as a means of projecting longer-term costs.
BHP Billiton (BHP.AX) (BLT.L) is the world's largest supplier of sea-borne hard coking coal via a joint venture with Japan's Mitsubishi Corp (8058.T).
At least two other coking coal producers, Macarthur Coal (MCC.AX) and Gloucester Coal (GCL.AX) have followed BHP's lead in quarterly pricing.
Mallyon said the company's coking coal contracts would run for one
RIV Price at posting:
$16.50 Sentiment: Hold Disclosure: Held
