Rio Tinto Share Price: Miner Agrees Sale of Interest in Australian Copper Mine
iNVEZZ.com Monday, July 29th: UK-based Rio Tinto (LON:RIO) has agreed to sell its majority stake in the Northparkes copper mine in Australia to a major Chinese natural resources firm, the world’s second-largest mining company announced today.
According to the statement, Rio had reached a binding agreement to sell its 80-percent interest in the Northparkes mine to China Molybdenum Co. (HK:3993). The deal should be completed by the end of the year and it is subject to regulatory approval and conditional on Rio’s joint venture partners, Sumitomo Metal Mining and Sumitomo Corporation Mineral Resources, waiving or failing to exercise their pre-emption rights to match China Molybdenum’s offer.
If approved the purchase of Northparkes would be one of the biggest this year by a Chinese company of a mining asset. Making its first foray offshore and into copper, China Molybdenum will gain control of an operation that produced almost 54,000 tonnes of copper last year and 72,000 ounces of gold.
China Molybdenum’s Chairman Wu Wenjun has told Bloomberg that the board was optimistic on copper and gold. “Although they’re a small part in our operations, they’re part of our development strategy both in China and overseas,” he remarked in an interview today.
**Northparkes Not “Good Fit” with Rio’s Strategy**
Unlike China Molybdenum, Rio Tinto does not recognise the Northparkes mine as a viable investment. Its Chief Financial Officer Chris Lynch said in the group’s statement today: “Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy.” According to him, the disposal of the controlling interest in the mine represented “great value for our shareholders”.
Rio pledged in November to cut costs and spending in order to protect a single-A credit rating, reduce net debt of $19 billion and lift shareholder returns as slowing global demand and a fall in commodity prices have hurt profits at mining firms. As part of the disposal programme, earlier this year, Rio sold a nickel and copper project in the U.S. for $325 million, but it abandoned the sale of its diamond business last month after failing to find a buyer. In June, the company also sold a nickel and copper mine in the U.S. for $325 million.
**Oyu Tolgoi Project on Hold Again**
!m[Key Mongolian Project Hits New Hurdle](/uploads/story/4398/thumbs/pic1_inline.jpg)
In a separate development, Rio Tinto announced today that it had delayed work on the underground expansion of its Oyu Tolgoi copper mine in Mongolia after the government had said that parliament would need to approve financing for the project, which was expected to cost more than $5 billion. The Anglo-
Australian miner noted that the Mongolian Parliament was currently in summer recess and the approval process might take some time to work through. According to the group’s statement, however, Rio remains committed to working with the government to secure financing for Oyu Tolgoi.
The delay marks the latest bump in the road for Rio at one of its key projects, which started exporting copper earlier in July following two last-minute hiccups in securing government approval.
**The Rio Tinto share price in London was 0.06 percent down at £2,918.24p as of 09:19 BST today.**
**The China Molybdenum share price in Hong Kong was 0.34 percent down at HK$2.91 at the end of Friday’s trading session.**