Rio Tinto sells copper mine to Chinese firm
China Molybdenum, the nation's second-biggest producer of the steelmaking material, has agreed to pay US$820 million for Rio Tinto's Northparkes copper mine in Australia.
The sale is expected to be completed by the end of the year, Rio said yesterday. London-based Rio owns 80 per cent of the mine with the balance held by Sumitomo, which has the right to match the offer. It's valued at about US$800 million, Citigroup said in a February report.
Buying the stake, a transaction which would be the third-largest purchase by a Chinese company of a mining asset this year, gives China Molybdenum control of an operation that provided 43,100 tonnes of mined copper for Rio in 2012 as well as an underground training centre.
The world's second-biggest mining firm is joining global rivals in selling assets after falling commodity prices crimped revenue.
The sale highlights "that there are Chinese companies wishing to invest offshore," said Glyn Lawcock, Sydney-based head of resources research at UBS. "It shows people are looking for copper assets as well."
Rio fell 0.23 per cent to A$57.11 in trading in Sydney yesterday. The stock has dropped 13 per cent this year.
Copper, used in electrical wiring and tubes, is expected to gain until at least 2015, according to analyst forecasts as ageing ore bodies and few large new discoveries keep the metal's supply and demand balance tight.
"Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy," said Rio chief financial officer Chris Lynch. "The agreed sale of Northparkes follows our recently completed divestment of the Eagle nickel project in the United States."
Before today, Chinese companies had announced 67 mining deals this year worth a total of US$7.1 billion, down from 269 deals in 2012 worth US$27.7 billion, according to data.
China Molybdenum last bought assets in 2008, when it paid HK$350 million for three gold mines in China, according to the data.
Rio may reap US$10.4 billion from asset sales, Deutsche Bank estimated in March. The firm considered selling Northparkes in 2009, and held on to it after copper and gold prices rose, Rio said in December that year.