RPT-Rio Tinto Seeks Final Bids for Copper Mine in June, Sumitomo wildcard-Shanghai Metals Market

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RPT-Rio Tinto Seeks Final Bids for Copper Mine in June, Sumitomo wildcard

Industry News 10:20:11AM Jun 06, 2013 Source:SMM

(Reuters) - Rio Tinto Ltd is seeking final bids for its majority stake in the Northparkes copper mine in Australia this month, with at least two bidders expected to be in the running, people familiar with the process said.

The 80 percent stake in Northparkes is one of several assets Rio has put on the block, with new CEO Sam Walsh aiming to raise what he has called "significant cash proceeds" to cut debt and protect the global miner's single-A credit rating.

OZ Minerals Ltd and China's MMG Ltd are expected to submit final bids for the stake that Rio hopes could fetch around $800 million, three sources said. All sources declined to be named as the process is confidential.

Rio is keen to complete the bid process by the end of June, two people said.

Its other, larger assets up for sale, including majority stakes in Iron Ore Company of Canada, and Coal & Allied in Australia, are seen as more difficult to sell in a volatile commodities market in which trade buyers have become cautious and capital has dried up.

"Strategically (Northparkes) is an ideal fit for OZ Minerals," said Credit Suisse analyst Michael Slifirski.

OZ Minerals needs production to fill a gap between declining output at its Prominent Hill mine and the ramp-up of its Carapateena mine, and it would give it experience in the block-caving technique which it could then use at Carapateena.

The timing of the Northparkes sale will hinge on whether Rio's 20 percent partner in the mine, Sumitomo Metal Mining Co Ltd with Sumitomo Corp, exercises its rights to match the winning bid, which could stretch out the process.

Sumitomo Metal Mining said in February it is looking to more than double its copper interests to 300,000 tonnes a year within the next nine years, a target that a takeover of Northparkes would help it meet.

There has been speculation that private equity firms were looking at the asset, but analysts and bankers doubted private equity firms would submit final bids as they would be wary of taking on the commodity price risk.

Rio is not certain to get the price it wants. The company tried to sell the same asset for more than $700 million in 2009, but scrapped the auction after receiving lower bids.

Still, copper prices were weaker then than they are now, and the mine was awaiting expansion at the time. That expansion has since been completed.

OZ Minerals spurned the asset then, but it is now cash-rich and hunting for acquisitions.

Credit Suisse's Slifirski said there is further expansion potential at the mine, but a buyer may put a low value on that option as the copper grade in the undeveloped area appears to be significantly lower than in the current operation.

MMG, OZ Minerals, Carlyle and Rio Tinto, which is being advised by Macquarie Capital, declined to comment.

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RPT-Rio Tinto Seeks Final Bids for Copper Mine in June, Sumitomo wildcard

Industry News 10:20:11AM Jun 06, 2013 Source:SMM

(Reuters) - Rio Tinto Ltd is seeking final bids for its majority stake in the Northparkes copper mine in Australia this month, with at least two bidders expected to be in the running, people familiar with the process said.

The 80 percent stake in Northparkes is one of several assets Rio has put on the block, with new CEO Sam Walsh aiming to raise what he has called "significant cash proceeds" to cut debt and protect the global miner's single-A credit rating.

OZ Minerals Ltd and China's MMG Ltd are expected to submit final bids for the stake that Rio hopes could fetch around $800 million, three sources said. All sources declined to be named as the process is confidential.

Rio is keen to complete the bid process by the end of June, two people said.

Its other, larger assets up for sale, including majority stakes in Iron Ore Company of Canada, and Coal & Allied in Australia, are seen as more difficult to sell in a volatile commodities market in which trade buyers have become cautious and capital has dried up.

"Strategically (Northparkes) is an ideal fit for OZ Minerals," said Credit Suisse analyst Michael Slifirski.

OZ Minerals needs production to fill a gap between declining output at its Prominent Hill mine and the ramp-up of its Carapateena mine, and it would give it experience in the block-caving technique which it could then use at Carapateena.

The timing of the Northparkes sale will hinge on whether Rio's 20 percent partner in the mine, Sumitomo Metal Mining Co Ltd with Sumitomo Corp, exercises its rights to match the winning bid, which could stretch out the process.

Sumitomo Metal Mining said in February it is looking to more than double its copper interests to 300,000 tonnes a year within the next nine years, a target that a takeover of Northparkes would help it meet.

There has been speculation that private equity firms were looking at the asset, but analysts and bankers doubted private equity firms would submit final bids as they would be wary of taking on the commodity price risk.

Rio is not certain to get the price it wants. The company tried to sell the same asset for more than $700 million in 2009, but scrapped the auction after receiving lower bids.

Still, copper prices were weaker then than they are now, and the mine was awaiting expansion at the time. That expansion has since been completed.

OZ Minerals spurned the asset then, but it is now cash-rich and hunting for acquisitions.

Credit Suisse's Slifirski said there is further expansion potential at the mine, but a buyer may put a low value on that option as the copper grade in the undeveloped area appears to be significantly lower than in the current operation.

MMG, OZ Minerals, Carlyle and Rio Tinto, which is being advised by Macquarie Capital, declined to comment.