Rio’s Pacific Aluminium May Fetch $2 Billion, Macquarie Says

2017-08-14 23:42:42.303 GMT

By David Stringer

(Bloomberg) -- Unit doesn’t fit Rio Tinto Group’s criteria for world class assets; co. been seeking to sell the ops. since 2011, Macquarie analysts write in note dated August 14.

* At current spot prices, the smelters generate strong cash flow, though subject to “rising wholesale power prices, a largely unionized labor force, and uncertainty over reliable power supply”

* Smelters avg. break-even cost ~$1,630/ton in FY17, Macquarie est.

* Media reports cite potential sale price $1b, in line with June 30 NOA value; Macquarie sees significant upside to price forecasts should sentiment improve

* Co. spokesman declined to comment