iNVEZZ.com, Thursday, January 2: Rio Tinto plc (LON:RIO) plans to conduct a review of its interest in the Pebble Mine copper, gold and molybdenum prospect, including whether to cut its ties with the proposed project in southwest Alaska, the London-based mining giant has said.
“Rio Tinto has advised the management of Northern Dynasty Minerals Ltd, which owns 100 percent of the Pebble Project, that it intends to undertake a strategic review, including a possible divestment, of its shareholding in Northern Dynasty,” the miner said in a statement on 23 December. Rio Tinto, through QIT-Fer et Titane Inc., an indirect wholly-owned subsidiary of Rio Tinto plc, owns 18,145,845 common shares of Northern Dynasty, representing about 19.1 percent of Northern Dynasty's issued and outstanding shares. The strategic review will consider whether the project fits with the "strategy of investing in and operating long life and expandable assets."
Rio Tinto plc’s share price was down 1.04 percent to 3,374p as of 13:35 UTC today, valuing the company at £62.37 billion.
Rio Tinto’s spokesman David Outhwaite has denied the review is connected to a letter sent to CEO Sam Walsh by New York City Comptroller John Liu and California State Controller John Chiang, in which they warned about risks of being associated with the proposed mining project located near the headwaters of a world-class salmon fishery in Alaska's Bristol Bay region. The two financial officers oversee pension funds that are substantial, long-term shareholders of Rio Tinto plc.
“Northern Dynasty has lost roughly 80 percent of its market value over the past two years,” wrote John Chiang and John Liu. “We believe the reputational risks the investment poses to Rio Tinto now outweigh its market valuation. We therefore request that Rio Tinto divest from the project,” they wrote.
“It wouldn't be right to say it was in response to the letter," Outhwaite said.
Rio Tinto looks for growth opportunities beyond China
Commenting on Rio Tinto’s prospects for future growth, CEO Sam Walsh said last month the group is looking beyond China and is well placed to benefit from the industrialisation of South America, Africa and the Middle East.
"Beyond China none of us should forget there's India, there's the Asian nations, there's the Middle East, the former Soviet Union, South America and Africa," Walsh told a British Chamber of Commerce lunch in Perth, Australia on December 20.
The mining giant, however, expects China will remain a key driver of iron ore demand in the foreseeable future with steel mills in the world's second largest economy set to increase production to keep pace with the continuing urbanisation process in the country.
As of 14:11 UTC buy Rio Tinto shares at 3,373p
As of 14:11 UTC sell Rio Tinto shares at 3,372p
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.