ANGLO-AUSTRALIAN miner Rio Tinto is finalizing a US$3.8 billion takeover bid for Africa-focused Riversdale, upping an earlier offer as it seeks to gain key coking coal supplies amid soaring demand from China and India.

A formal bid for Mozambique-based Riversdale Mining could spark a bidding war by drawing out other suitors wanting access to what is expected to be the world's second-largest coal exporting market in coming years. A group of state-run Indian firms has said it is looking at Riversdale and other major mining companies are also interested, sources said.

Rio Tinto was locked in talks with Australian-listed Riversdale's board over an A$16 (US$16) per share takeover offer but a final deal has not yet been completed because of some last-minute wrangling over price.