Anglo-Australian mining giant Rio Tinto said on October 17 it plans to sell 13 aluminium businesses in Australia, Europe and the United States as it looks to trim its Alcan business. The company, which did not reveal how much it expected to raise from the asset sales, said refineries and smelters would go on the auction block as it looked to focus on so-called tier-one assets.
Rio bought Canada's Alcan at the top of the market in 2007 for about US $38 billion, driving up debt and forcing it to sell businesses and slash costs when the market turned amid the global financial crisis. Chief executive Tom Albanese said the assets were well-managed businesses with productive workforces but no longer aligned with Rio's strategy.
"The strength of our balance sheet means that we can choose the most opportune method and timing to divest these assets, which may not occur until the economic climate improves," he said.
Rio's interests in six Australian and New Zealand assets will transfer into a new business unit to be called Pacific Aluminium. A second group of seven non-core assets will continue to be managed by Rio Tinto Alcan while the company looks into divestment options, Rio said.
This group includes three specialty alumina plants and the Gardanne refinery in France, the Sebree smelter in the United States and the Lynemouth smelter and power station in Britain, it said.
"This move is a further significant step towards achieving our performance targets in the aluminium product group," said Albanese.
Rio in February said it was looking at its portfolio of businesses as it targeted improved financial performance.
It posted record first-half earnings in August with net profit hitting US $7.6 billion on the back of strong Asian demand for its commodities.