THE Anglo-Australian mining giant Rio Tinto is to launch a blistering counter-attack against BHP Billiton’s £68 billion takeover bid this week. Tom Albanese, Rio’s chief executive, will highlight his firm’s record of identifying and exploiting mining assets, and attack BHP’s track record and claims for synergies in combining the two companies.

In an eagerly awaited investor presentation tomorrow, Rio will claim BHP has radically underestimated the potential cost and revenue savings of combining the two groups and particularly their iron-ore assets in Australia. BHP has estimated that the deal would create $3.7 billion (£1.8 billion) of annual synergies, but Rio will say the synergies will be far more and the offer significantly undervalues the company.

BHP’s approach to Rio, which is one of the world’s biggest takeover bids, has significant consequences for the global economy. The merged company would control more than a third of the world’s iron ore and make it a key player in the development of China, the largest consumer of such commodities.

Though Rio will attack its rival, the presentation is not designed to be a full defence of the bid. However, Rio has beefed up its defence team, appointing Deutsche Bank as an adviser alongside Morgan Stanley, Macquarie, NM Rothschild, Credit Suisse and JP Morgan Cazenove. The move is significant because Deutsche has been one of the top advisers on mining and resources deals for some time.

A key part of Rio’s offensive will be its record at two copper-mining prospects formerly owned by its rival. Albanese is expected to reveal that production estimates for the La Granja copper mine in Peru have now doubled to 500,000 tonnes a year. This would make it one of the world’s top five copper mines.

Such a result could be embarrassing for BHP. Exploration rights to La Granja were originally bought by Billiton in 2000, before its merger with BHP, for $37.5m. The group was given five years to complete a feasibility study and a further four to start commercial production. However, after the BHP Billiton merger in 2001, the company pulled out and wrote off investment costs of $41m.

Rio later bought La Granja at the end of 2005. Under the revised production estimates the mine is potentially worth more than four times BHP’s earlier forecast.

Rio is also expected to highlight its success and exploration at the Oyu Tolgoi prospect in Mongolia, where production is now estimated at 440,000 tonnes a year. The mining project was bought by BHP in 1996, but shut down in 1999. Ivanhoe, a Canadian miner, took over the project as a joint venture in 2000, with BHP later selling its rights to the project in 2002. Rio has a 20% stake in the Ivanhoe project with an option to increase this to 40%.

BHP’s chief executive, Marius Kloppers, has been touring iron-ore customers in Asia in the past week and facing bitter opposition.

A combination of BHP and Rio would create a natural-resources giant controlling almost 40% of internationally traded iron ore – a similar share to Brazil’s CVRD – and a big presence in copper, coal and aluminium.

The China Iron and Steel Association has attacked the deal, claiming that it would create an “even bigger monopoly” while the trade body, the International Iron and Steel Institute, says the deal is “against the public interest” and should be blocked.

The European Commission has already started looking at competition issues and has been in contact with BHP. The group may be counting on Sir John Grant, Britain’s former top diplomat in Brussels, who became an adviser to the group earlier this year, to negotiate competition concerns.

Rio’s Albanese is due to start a charm offensive over the next few days, during which he will outline to shareholders the benefits of a $38 billion takeover of the aluminium producer Alcan.

BHP has yet formally to launch a bid and an offer could still be some weeks away.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats