The Deal: Rio Tinto Sells Australian Copper Project to China Molybdenum
The deal, announced Monday, July 29, is the second copper asset sale by Rio Tinto's new CEO Sam Walsh in quick succession after he agreed to offload Rio Tinto Eagle Mine to Lundin Mining
"Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy," Rio Tinto CFO Chris Lynch said in a statement.
The $820 million price tag is at the top end of analysts' estimates and provides further proof of demand for copper projects, which have proved saleable assets for both Rio Tinto and rival BHP Billiton Ltd.
Rio Tinto put its stake on the block in April, hiring Macquarie to manage a sale that reportedly attracted interest from China's MMG, Australian copper miner OZ Minerals, Belgium's Nyrstar and private equity firms Carlyle Group and Kohlberg Kravis Roberts. Rio Tinto acquired Northparkes in 2000 as part of its $3.5 billion acquisition of North Ltd. It had attempted to sell the stake in 2009 but pulled the sale, which was also managed by Macquarie, after copper prices slumped amid the global credit crisis. Completion of the Northparkes deal would mark a first move into copper and a first cross-border deal for China Molybdenum, which listed on the Hong Kong exchange last year and has a market capitalization of about $5 billion.
Chinese billionaire Yu Yong's Cathay Fortune Corp. is a major shareholder in China Molybdenum. Cathay has also bid as much as $191 million for another Australian copper mining company, Discovery Metals Ltd., the operator of a copper project in Botswana.