Rio Tinto reports its third quarter production and sales data today, but the company might have sale news about its Pacific Aluminium assets.
These consist of three smelters and a power station in Australia, as well as plant in New Zealand. It employs more than 2,000 people and in the six months to June recorded net income of $US92 million, up from $US29 million a year earlier.
Rio is said to be close to selling its aluminium assets in Australia and New Zealand to GFG Alliance, the investment company run by steel tycoon Sanjeev Gupta – he’s the man who bought Arrium, the Whyalla steel maker out of bankruptcy earlier this year.
Mr Gupta is flying to Australia this week to continue discussions with Rio and look over a large power station in Gladstone, which is included in the sale, according media reports overnight Monday.
The Financial Times says that “while the talks could end without agreement, Mr Gupta is keen to buy Rio’s Pacific Aluminium (PacAl) business as he looks to build a global industrial conglomerate spanning metals, power, renewable energy and finance.”
But the FT says there could face competition from Century Aluminum, a business 47% owned by Swiss commodities titan Glencore, which has also been casting an eye over PacAl, as the business is known.
Rio has tried to sell or spin-off PacAl on several occasions but the market is now more conducive to a deal. But with the price of aluminium around five year highs thanks to China’s efforts to cut excess capacity and the growing interest in electric vehicles.
Rio shares jumped 3.4% yesterday to end at $70.55 thanks to the big rise in iron ore prices last Friday and rising futures prices yesterday. The Metal Bulletin price jumped a further 44 cents (after the 4.1% rise on Friday) to $US62.94.
