Rio Tinto PLC (RIO) has assumed control of Riversdale Mining Ltd. (RIV.AU), with its interest in the Africa-focused coal producer rising above 50% Friday and with the prospect of increasing it further before the takeover offer closes in less than two weeks.

Riversdale shares continue to trade on the Australian exchange, although with a marginal free float that people familiar with the situation expect will encourage those investors to sell to Rio Tinto. Steel producers Tata Steel Ltd. (500470.BY) of India and (SID) of Brazil together own a 47% stake and have not indicated any intention of letting it go.

Rio Tinto in a statement said it will now move quickly to start working with Riversdale's team to accelerate the development of two promising coking coal projects in Mozambique.

Riversdale Thursday appointed three Rio Tinto nominees to its board, including energy division Chief Executive Doug Ritchie, and Rio said other appointments are expected to follow. Riversdale's executive chairman, Michael O'Keeffe, and another director plan to step down from the board now that Rio has a majority interest.

"The new Riversdale board will reflect our majority shareholding and help clear the way for the development of Riversdale's assets as quickly as possible," Ritchie said.

Demand for undeveloped deposits of minerals essential in manufacturing steel is being driven by rapid industrialization in Asia, particularly China and India. Riversdale has identified a 13 billion metric ton resource in an area of Mozambique attracting the attention of mining and steel companies on the promise it could rival Australia's coal-rich Bowen Basin in Queensland, and continues to explore the region.

"We remain optimistic about the outlook for the global coking coal market," said Ritchie, who has been with the company since 1986. "This is a great opportunity for our business to deliver on the development of a large-scale coking coal resource."

Rio is one of the leading suppliers of coking and thermal coal to the Asian seaborne market, with all but one of its mines in Australia. Mozambique is positioned to export coal direct to countries including China and India, once key infrastructure including rail links and a port are built.

Riversdale's Benga project in Tete province is the more advanced of two ongoing projects in Mozambique, with first exports scheduled for later this year. Initial production from the Zambeze project has been forecast for 2014.

Riversdale also operates a colliery in neighboring South Africa that the company has estimated the mine has at least 12 more years of life, with the possibility this could be extended. Opened in 1985, the operation is 26%-owned by black South African investors. Rio earlier this year said it would likely sell the operation.

Rio first made its offer for Riversdale in December, but a slow response from the coal company's shareholders prompted the bid deadline to be extended several times and the offer price increased by 50 cents to 16.50 Australian dollars (US$) a share to value the company at almost US$4 billion. Rio has also been frustrated from quickly wrapping up the acquisition by CSN and Tata Steel, which after the offer was made increased their stakes to 19.9% and 27.1%, respectively.

A spokesman for Tata declined to comment when contacted by Dow Jones Newswires.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com
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