A consortium led by Chinese firms, including state-owned Hebei Iron and Steel Group, has signed a pact to buy Rio Tinto's 57.7% stake in Palabora Mining for $373 million.
"Rio Tinto has reached a binding agreement to sell its 57.7% effective interest in Palabora Mining Company for $373 million," Rio Tinto said in a statement today.
Palabora is South Africa's major producer of refined copper and operates an underground block cave copper mine, a smelter and refinery complex based in Phalaborwa in Limpopo Province.
It produces about 80,000 tonne refined copper per year, supplying most of South Africa's copper needs and exporting the rest.
"The purchaser is a consortium comprising South African and Chinese entities led by Industrial Development Corporation of South Africa and Hebei Iron and Steel Group, who are committed to the ongoing sustainable management of Palabora," the statement said.
Hebei has 35% interest in the consortium. The South Africa entity and China's Tewoo Group have 20% stake each. The rest 25% is owned by General Nice Development, a privately-owned Chinese trading company.
Rio said it sold stake in the firm as it did not fit its portfolio anymore.
"Palabora is a good business but is no longer a natural fit within Rio Tinto's portfolio. Selling our stake reflects Rio Tinto's policy of continually reviewing our portfolio to generate best value for shareholders," Rio Tinto's CFO Guy Elliott said.
The sale is subject to customary regulatory approvals in South Africa and China which are expected to take four to six months, Rio Tinto said.
