Rio Tinto is re-examining its aluminium divestment strategy, as the market starts to gather strength.
This is not the first time the miner has attempted to sell off its aluminium division, first putting it on the market in 2011 amid a global aluminium slowdown.
It managed to offload its stakes in some aluminium operations, offloading its holdings in Constellium NV for about $330 million,
It tried to sell Pacific Aluminium and other assets in a bid to decrease net debt of $22 billion and maintain its single-A credit rating.
However this failed, with Rio Tinto CEO Sam Walsh stating at the time that it could not manage a “value-drive sale” of its aluminium subsidiary.
“The market was aware PacAl wasn’t going to sell,” Walsh said.
“I am a realist. Let’s get on with life. Running two aluminium businesses within one organisation…that’s not all that productive.”
He said the company would not sell assets at any price simply to “tick boxes”.
“I think the market was aware that Pacific Aluminium was not going to sell,” Walsh said.
The miner has approached Credit Suisse to act as an agent for its assets, which include smetlers at Bell Bay in Tasmania, Tiwai Piont in New Zealand, Gove in the Northern Territory, Tomago near in Newcastle, and both Boyne and Yarwun near Gladstone.
It also has alumina and bauxite mines at Gove and Weipa.
According to sources close to the situation, development in the previously strained alumina market has garnered a renewed interest in the sale, the Australian Financial Review reports.
Analyst reports now have the once struggling division forecast to generating revenues of more than US$ 3 billion this year, much of which has been supported by Rio’s stringent cost cutting measures.
Rio Tinto has declined to comment on the market rumours.