Rio Tinto has hired Macquarie Group to find a buyer for its majority stake in the Northparkes copper and gold mine, located in Central West New South Wales.
Rio Tinto last year said Northparkes was valued at US$405 million and expect there to be enough resources to continue mining for at least another decade.
Northparkes is a jointly owned operation between Japan based Sumitomo who holds a 20 per cent stake and Rio with the majority 80 per cent share.
The proposed sale of the mine is in line with newly appointed CEO Sam Walsh’s regime of cost cutting and turning the company’s focus towards more profitable assets like Rio Tinto’s iron ore operations in Western Australia’s Pilbara region.
Yesterday Australian Mining reported Rio’s move to sell its stake in several of its Australian coal mines including Clermont, Blair Athol, and Coal & Allied.
The move to sell off copper and coal assets has the potential to leave Rio even more exposed to the volatilities of iron ore fluctuations.
Commonwealth Bank analysts last month said Rio Tinto had the potential to realise US$13.5 billion from asset sales, and selling its 80 per cent stake in Northparkes could raise as much as US$1 billion, 4-traders.com reported.
The mine last year produced 53,800 metric tons of copper and 72,000 troy ounces of gold in 2012.
Australian Mining recently visited the Northparkes site, speaking to managing director Stef Loader she said at the time that Rio’s recent $3 billion loss, and subsequent radical cost cutting regime will affect everyone at Rio in some way.
“It will affect us all across the board, the context for us is we are a good operation and we’re in a healthy financial state at the moment and we’re also in pretty good times.
“Internally over the past couple of weeks we’ve been talking about what we need to do to prepare ourselves to be just as successful in five or ten years time,” she said.
“Currently we’re looking at another 20 years mine life, our published mine life is 2024 and we’re working pretty hard to get that through to 2032 and beyond.
“We’re in a great state and we’re a well run business.”
Loader said that Northparkes has the resources and the knowhow to determine what needs to be done over the next two to three years to ensure the site receives future investment.
Northparkes employs about 350 local people from the Parkes, Peak Hill and Forbes areas, only bringing in people from further afield when specialised expertise is required.
There are also approximately 400 contractors on site, but there are rumours in the mining community some contractors have already been layed off at the mine.
Northparkes has two ore bodies; E26 was a smaller but higher grade deposit and when completed delivered about $2 billion in value.
The second ore body, E48 is larger but of lower ore grade, it is about 280 metres in diameter and about one kilometre deep.
Currently about 6 million tonnes comes out from the underground mine every year.
Rio Tinto acquired the asset as part of the $3.5 acquisition of North Ltd. in 2000, outbidding Anglo American.
The mine exports most of the copper concentrate it produces to Japan, China and India.