Rio Tinto Share Price: Buyer Emerges for Struggling French Units

on Jul 15, 2013
Listen Monday, July 15th: UK-based mining giant Rio Tinto (LON:RIO) announced on Saturday that it had received a binding offer for two of its struggling aluminium plants in France. Germany’s largest aluminium producer, Trimet Aluminium SE, and state-run utility Electricité de France SA (EPA:EDF) had agreed to take over Rio Tinto’s St. Jean-de-Maurienne aluminium smelter and Castelsarrasin casting facility, the *Wall Street Journal* reported on Saturday.

Trimet revealed in a statement on Saturday that it would acquire a 65-percent interest, while EDF would buy the remaining 35-percent stake in the plants which produce aluminium wire rods, used to make electric cables for the energy industry and connecting elements in the automobile industry. The bidders said they had committed to invest €200 million to modernise the facilities, but did not disclose the financial terms of the offer.

Rio Tinto said that the terms of the potential agreement on the binding offer for its French aluminium units, put up for sale last year, are conditional upon regulatory approvals and completion of an energy and partnership arrangement with EDF. The mining company added that it will respond to the offer following consultations with the relevant works councils.

If approved, the deal with Trimet and EDF would save more than 500 jobs and see Rio Tinto one step further in its strategy to reduce its aluminium activities and lower costs through disposal of unprofitable businesses. The *Wall Street Journal* quoted Jacynthe Côté, Chief Executive Officer of Rio Tinto Alcan (the company’s aluminium division), as saying in a statement: “The sale of these facilities underscores our strategy to streamline Rio Tinto Alcan, through the divestment of noncore assets, so that it is focused only on our lowest-cost businesses.”

The news of the potential purchase was also welcomed by France, which, battling recession and rising unemployment, feared that the Anglo-American miner would close the plants after failing to find a buyer.
“The Trimet group gives new life to this site with a Franco-German partnership,” said French Prime Minister Jean-Marc Ayrault, as quoted by Reuters on Sunday. “There is no future for France without industry,” he added.

**Rio Tinto Begins Coal Output from Extended Australian Mine**
!m[Germany’s Trimet and Electricité de France Offer to Buy Two of Rio’s Aluminium Plants](/uploads/story/3959/thumbs/pic1_inline.jpg)
In a separate development, Rio Tinto announced on Friday that it had begun producing coal from a $2 billion expansion of a mine in eastern Australia. The extension of the company’s Kestrel mine in central Queensland state is expected to add 20 years to the life of the operation and help secure work for more than 400 employees, Rio Tinto said in statement. The mine exports coking coal used in steel production to
China, India, Japan, Korea, Taiwan and Europe.
“After four years of construction, seeing the longwall cutting coal is an exciting milestone and marks the start of a long future for Kestrel,” said John Coughlan, general manager at the mine.
**As of 08:17 BST today, the Rio Tinto share price in London was 2,836.50p, or 1.50 percent above the previous trading day’s closing level of 2,825.50.**