Rio warns offer blind to boom

The chief executive of Anglo-Australian mining group Rio Tinto today told takeover predator BHP Billiton that the company was worth much more than its $165 billion (£84 billion) offer because the price of metals may rise for another decade.

Rio chief executive Tom Albanese said that labour shortages, rising costs and declining ore quality were limiting metals supplies as growth fuels demand from China and India.

Shares in Rio, the world's third-largest mining company, have soared 59% on the London Stock Exchange in the past year as copper, gold and iron ore have risen to record highs and BHP made its bid.

These factors make Rio "much, much more valuable than anything we've seen from BHP", Albanese said.

BHP, which made its offer in February, believes that a tie-up with Rio will generate $3.7 billion in cost savings and revenue gains.