BLBG:Rio, Anglo Plan to Sell $720 Million Holding in Copper Producer Palabora
Rio Tinto Group and Anglo American Plc (AAL), which together own about three-quarters of Palabora Mining Co., said they plan to sell their entire holdings in the South African miner as it no longer fits their investment objectives.
Palabora’s main asset, a mine that produces copper and magnetite, “is no longer of a sufficient scale” for either Rio or Anglo, and a sale process for their stakes has started, the companies said today. Rio holds about 58 percent of Palabora and London-based Anglo almost 17 percent. Their combined holding is valued at about $720 million at current market prices.
The Palabora operation accounted for 8 percent of Rio’s mined copper output in the first half of this year, according to Liberum Capital Ltd. The Phalaborwa, Limpopo province-based company is South Africa’s only producer of refined copper, with output of about 80,000 metric tons annually.
Mining is scheduled to end at Palabora’s operation in early 2016, while a study to extend the mine-life to 2030 is under way, Rio said.
“Rio Tinto is no longer the natural owner of Palabora due to the limited opportunity to significantly expand copper mining,” Andrew Harding, chief executive officer of Rio’s copper unit, said in a statement. “We believe Palabora has a solid future under an owner who can develop the magnetite business alongside the existing copper and vermiculite operations.”
Palabora has advanced 48 percent in Johannesburg trading in the last 12 months, giving the company a value of 6.96 billion rand ($980 million.) The stock gained 0.9 percent to 143.96 rand at 9:40 a.m. local time. The balance of is shares are held by private investors.
Rio Tinto, the world’s second-largest mining company, fell 2.8 percent to 3,572 pence in London by 8:43 a.m. and Anglo American dropped 2.1 percent to 2,407 pence.
To contact the reporters on this story: Alastair Reed in Johannesburg at areed12@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
