Rio sells stake in Northparkes mine to China

RIO TINTO has agreed to sell its majority stake in the Northparkes copper mine in Australia for $820m (£532.5m) to China Molybdenum, a Chinese firm making its first foray offshore and into copper.

The purchase is the biggest Chinese mining deal since China Guangdong Nuclear Power won control of the Husab uranium project in Namibia for about $2.3bn last year, as Beijing turned cautious on approving overseas acquisitions after splashing billions of dollars on iron ore projects in Australia that have yet to generate returns.

The stake in Northparkes is one of several assets Rio has put up for sale as it aims to slash $5bn in costs, pare debt and focus on its biggest, most profitable mines. It is also trying to sell a minority stake in Coal & Allied in Australia and its majority hold in Iron Ore Company of Canada.

Japan’s Sumitomo Metal Mining and Sumitomo, which own the remaining 20 per cent of Northparkes, have rights to match China Molybdenum’s bid. Sumitomo confirmed that, but otherwise declined to comment on the deal.

Rio Tinto was advised by Macquarie Bank, while Citi advised China Molybdenum.

Rio also said yesterday it has put on hold an expansion of the Oyu Tolgoi copper mine in Mongolia after the government said parliament will need to approve financing for the project