Rio Tinto sells US nickel mine asset for £207m

Suzie Neuwirth
FTSE 100-listed mining giant Rio Tinto yesterday announced that it has agreed to sell a US nickel-copper mine for $325m (£207m), as new chief executive Sam Walsh looks to divest assets and bolster the firm’s balance sheet.

The so-called Eagle project mine and mill – which is only 55 per cent complete – was sold to Lundin Mining, a diversified base metals mining company with operations in Portugal, Sweden and Spain.

The deal is expected to close in the third quarter of 2013 and is subject to regulatory approval.

“The sale of Eagle for $325m in cash is less than our estimate of $555m,” said broker Investec.

“Clearly Rio has left some value on the table with the project only 55 per cent complete and $300m remaining to be spent.

“Also, it is worth noting that the project was under review, suggesting some over run to the budget. The sale comes as no surprise.”

Chris Lynch, chief financial officer of Rio Tinto, said: “The sale of Eagle demonstrates our renewed focus and discipline in the way we allocate capital. We are making good progress on a number of other potential divestments as part of our goal to achieve substantial proceeds from divesting non-core assets.”

Rio has promised to focus on its key businesses and sell non-core assets as it wrestles with $19bn debt, sluggish demand and weaker prices.

The miner is looking to divest its majority stake in Iron Ore Co of Canada – Canada’s largest iron ore producer – and has drawn up a shortlist of half a dozen suitors, including private equity firm Blackstone and miner trader Glencore Xstrata. Rio values the miner at around $8bn and is seeking between $3.5bn and $4bn for its stake.

It is also reportedly looking to raise £250m from floating its diamonds unit on the London Stock Exchange this year.

Rio Tinto’s shares closed 2.6 per cent up at 2,759.50p yesterday.