Rio Tinto mulls Canada iron ore sale
Rio owns 59% of the Iron Ore Company of Canada, the country's largest producer of iron ore, and a sale could raise more than US$1.7 billion, according to the Wall Street Journal.
Credit Suisse and the investment banking arm of Canadian Imperial Bank of Commerce have been instructed to find a buyer for all or part of its stake, according to the report.
Rio Tinto has also been forced to prepare a temporary budget for its Oyu Tolgoi copper mine in Mongolia after no resolution in the row with the government there over claims of unpaid tax, cost overruns and a lack of transparency.
The two sides were supposed to have prepared a new budget for the huge copper mine by the end of February, with the dispute now seen as a possible threat to production starting at the US$6.6bn project in June as scheduled.
Turquoise Hill, a Canada-based company controlled by Rio Tinto, is the owner of Oyu Tolgoi.
Separately, Rio appointed Chris Lynch as its next chief financial officer (CFO) yesterday, a move welcomed by Deutsche Bank.
Lynch, who was CFO at BHP Billiton in the early part of the previous decade, is familiar with the aluminium sector from his 20-year stint at Alcoa.
Aluminium is a key financial turnaround requirement for Rio, the German bank believes.
Lynch is also very familiar with Rio’s main product iron ore, having headed BHP Billiton’s Carbon Steel Materials group.
“More recently Chris was CEO of the Australian toll roads company Transurban Group; while we do not expect Rio to move into infrastructure investment, we think interaction with local authorities and governments in the capital cities rather than just mining regions is something the Rio needs to focus on,”
Deutsche Bank has a ‘buy’ recommendation on Rio Tinto, with a price target of £47.20.
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