RTZ mulls pounds 1bn nickel bid

RTZ, Minorco and other mining giants are this week considering a possible pounds 1bn plus bid for Canada's Diamond Field Resources, which controls the world's largest nickel, copper and cobalt deposit at Voisey Bay in Labrador.

Industry sources say a fierce bidding war may yet break out after Diamond Fields stunned the market with an agreed merger with rival Canadian mining company Falconbridge, worth C$4bn (pounds 1.8bn) in all.

Almost all the of the world's big mining companies - including RTZ, the biggest metals and minerals producer of all - have been competing for a stake in Voisey Bay, whose development will now go ahead at a cost of C$1.5bn.

"RTZ and Minorco have both looked at it, and it is inconceivable they will not be reserving their position now," one mining industry insider said.

Both firms declined to comment officially, however, on what they called "market rumours".

Any outside bid, though, would be complicated by the 35 per cent stake in Voisey Bay already held by Inco of the US, the world's largest nickel producer.

Inco, which also holds a 5 per cent stake in Diamond Fields, said on Friday night it would respond this week to the merger move, and analysts see a counter-bid as possible to protect its market position.

Voisey Bay, described by analysts as the most important mining discovery for 30 years, hold 31.7 million tonnes of reserves and will come on stream in 1999.

RTZ owns huge copper and gold operations via Kennecott, as well as exploration projects at Greens Creek in Western Canada and a diamond prospecting venture in the frozen North West Territories.

South African controlled Minorco, which has expanded fast in recent years, also mines zinc and copper in Canada's Hudson Bay.