Sumitomo okays China Molybdenum's acquisition of Rio Tinto’s Northparkes copper mine
04 Sep 2013
Anglo-Australian miner Rio Tinto's plan of selling its majority stake in an Australian copper mine to China Molybdenum Luoyang Co Ltd (CMOC) has cleared a hurdle after its Japanese partner waived its right of first refusal.
In July, Rio Tinto, the world's second-largest mining company, agreed to sell its majority 80 per cent stake in the Northparkes copper mine in central NSW to CMOC, for $820 million (A$884.249 million).
Japan's Sumitomo Group, which holds the remaining 20 per cent of Northparkes, has the rights to match CMOC's offer, but has now decided not to bid.
"CMOC is pleased to announce that they look forward to closing the deal with Rio Tinto's subsidiary North Mining Limited and also to working with Sumitomo for the long-term benefit of both parties," China Molybdenum said in a statement emailed to Reuters today.
Rio Tinto, which had last year end valued Northparkes at $405 million, had hired Macquarie Group to find a buyer for the mine that produced 53,800 metric tons of copper and 72,000 troy ounces of gold in 2012.
Although some analysts have said that the sale may fetch the London-based miner around $1 billion based on fellow rival BHP Billiton's April sale of its Pinto Valley copper mine and a railroad in Arizona for $650 million.
Northparkes came into Rio Tinto's portfolio as part of its $3.5-billion acquisition of Australian miner North Ltd in 2000, and has since expanded the open pit and underground mines, extending the life of the mines to 2024.
The proposed sale is part of Rio Tinto's new chief executive, Sam Walsh's plans to sell non-core assets and focus on more profitable ones like its iron-ore mines in Australia's Pilbara region.
Northparkes will become an insignificant asset since Rio Tinto has started mining its majority-controlled massive Oyu Tolgoi copper mine in Mongolia.
Rio Tinto is also looking to sell its Canadian iron-ore mines, stakes in several Australian coal mines, and its Pacific Aluminium unit.