BHP's iron-ore record gives new stir to bid war with Rio

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Third-quarter iron-ore output rose 22% to a record 28 million tonnes against Rio's 16% growth, although that came from a much higher base. BHP's petroleum division grew output by 19% to 32.73 million barrels of oil equivalent.

Energy is emerging as another front in the bid battle, with Rio chief executive Tom Albanese last week deriding BHP as a "nominal player in the global sector". His BHP counterpart, Marius Kloppers, responded: "Rio are energy-short, and will not benefit from the 80% margin in that business. I don't know what Tom was thinking."

Rio is now trading at less than the value of BHP's 3.4-for-one share offer, indicating some investors expect the bid to succeed.

BHP has had some setbacks in common with Rio. Torrential rain in the Australian state of Queensland pushed down coking-coal output by 25% while lower ore grades at its giant Escondida copper mine in Chile reduced production by 8%.

Kloppers today said Rio had been outplayed by BHP in share price performance, volume growth and total return for shareholders.

"It must be terrible for them that, every quarter, BHP outperforms, and that has been the case for seven years," he added.

Iron ore is central to Rio's takeover defence, with Albanese saying his iron-ore strategy is better than that of BHP.

Rio has never entirely ruled out accepting an offer but says what is currently on the table does not reflect the value of its aggressive expansion.