Rio fails to sell loss-making aluminium as profit falls
By Sonali Paul and Clara Ferreira-Marques
MELBOURNE/LONDON (Reuters) - Mining group Rio Tinto (RIO.AX: Quote) has scrapped efforts to sell its loss-making Pacific Aluminium business, blaming poor market conditions as weaker iron ore, copper and coal prices dragged first-half profit down 18 percent.
Rio (RIO.L: Quote) - which has put a handful of assets on the block as it concentrates on core operations and battles $22 billion of debt - said in 2011 it could hive off Pacific Aluminium, known as Pac Al. But it said on Thursday it had not found a buyer and would not pursue a spin-off to shareholders.
Chief Executive Sam Walsh said there had been a number of offers for the business, but all had been below the price Rio wanted. Instead it will bring Pac Al back into the fold of Rio Tinto Alcan, its main aluminium business.
"I'm a pragmatist," said Walsh. "It doesn't make sense to give things away just so you can tick the box."
The world's biggest miners, under pressure from investors to refocus sprawling portfolios, tackle debt and even return cash, have put billions of dollars of unwanted assets up for sale, and buyers are scarce.
"It's a clear indication that while ... all of the majors see an opportunity to try to bolster their balance sheets by getting rid of their non-core assets, it's not the ideal market to be selling assets in," said analyst Hunter Hillcoat at brokerage Investec in London.
Some analysts took a negative view of Rio's decision to scrap a sale so soon after shelving the divestment of its diamond assets, and as doubts grow over its ability to sell larger operations, like Canadian iron ore.
Rio has so far this year announced or completed $1.9 billion of sales, but these have been copper mines and projects where demand has been stronger. Continued...