MELBOURNE--Rio Tinto PLC (RIO) said Monday it is selling its
majority stake in a copper-and-gold mine in Australia for US$820
million to a Chinese resources company, in its latest move to
bolster its balance sheet amid a global slowdown in commodities
demand.
Rio Tinto said it had reached a binding agreement to sell its
80% stake in the Northparkes mine to China Molybdenum Co.
(3993.HK). The deal hinges on units of Japan's Sumitomo Corp.
(8053.TO), which together own the remaining 20% interest, waiving
their right to match the offer.
"Northparkes is a successful business but is not of sufficient
size to be a good fit with our strategy," said Chris Lynch, Rio
Tinto's chief financial officer.
Rio Tinto has pledged to slash costs and spending in order to
protect a single-A credit rating and lift shareholder returns.
Rival mining companies, including BHP Billiton Ltd. (BHP) and
Glencore Xstrata PLC (GLEN.LN), are also selling assets as prices
of commodities like copper and coal remain weak due largely to
slower growth in China's economy.
Last month, Rio Tinto said it will sell a nickel and
copper-mining project in the U.S. to Toronto-based Lundin Mining
Corp. (LUN.T) for about US$325 million. The U.S. deal represented
the company's first disposal of an asset since Sam Walsh took over
as chief executive in January.
The Wall Street Journal in April reported the London-based
company had hired Macquarie Group to find a buyer for its stake in
Northparkes. South African investment bank Investec has estimated
Rio Tinto could raise between US$19 billion and US$22 billion from
the sale of various assets, including about US$650 million for
Northparkes.
Rio Tinto acquired the asset as part of the 3.5 billion
Australian dollar (US$3.2 billion) acquisition of North Ltd. in
2000, outbidding Anglo American PLC (AAL.LN). The mine exports most
of the copper concentrate it produces to customers in Japan, China
and India. According to Rio Tinto, extensions to the mine since it
began production in 1994 have extended its expected life to
2024.
Write to Robb M. Stewart at robb.stewart@wsj.com
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