Rio Tinto adds Australia copper mine to ‘for sale’ list

Rio Tinto has hired investment bank Macquarie to sell its majority stake in the North parks copper mine in Australia, a source familiar with the matter said, adding to a growing list of planned divestitures.
North parks, in New South Wales, is the latest of the global miner’s assets to be earmarked for sale, as Rio’s new chief executive officer Sam Walsh pushes ahead with aggressive cost cuts and the company battles to meet its promise of reaping “significant” cash proceeds from divestitures this year.Rio Tinto and Macquarie declined to comment on the sale.
Rio’s 80-per-cent stake in the mine accounted for less than 10 per cent of group copper production last year and amounts to a fraction of a copper division dominated by the potential of giant assets like Escondida in Chile and OyuTolgoi in Mongolia.
The mine has been valued by analysts at $300- to $400-million (U.S.) – modest in the context of Rio’s portfolio and its debts.
A sale, though, would be welcome as Rio targets a $5-billion cumulative reduction in costs by the end of 2014, and with the miner also under pressure from rating agencies to cut back on debts which more than doubled to $19.3-billion in 2012.
Standard & Poor’s revised Rio’s outlook to negative in February, outlining a one-in-three chance of the company’s rating being lowered in the next 12 to 18 months.
North parks joins a long list of other operations already on the block, including Rio’s diamond arm and aluminum assets the company has been reviewing for over a year. Rio is also selling a majority stake in Canada’s largest iron ore producer and has appointed advisers to help sell thermal coal assets.
The source familiar with the matter, however – confirming newspaper reports on the sale of Northparkes and the potential reduction of Rio’s 80-per-cent holding in Coal & Allied to just over a majority – said it was unlikely any of the assets would find a buyer quickly.
“I am not sure anyone is desperate to own these assets,” the source said, adding more operations could be added to the list unless sales are completed soon. The minority 20-per-cent stake in North parks is owned by Japan’s Sumitomo Group.