ABU DHABI – The financial turmoil has slowed Rio Tinto’s plans to shed some US assets and the company will wait until it secures the right price, the chief executive of its energy and minerals unit said yesterday.
Preston Chiaro also said energy would remain an integral part of the company’s business even if it sold some of its assets to raise funds to help pay its debts.
Global miner Rio Tinto has US$38 billion in debts.
We have put up four of our five (coal) mines in the US for sale over a year but there are no buyers. We will hang on to them, they are profitable and safe, we will not sell for a bargain price,’ Chiaro told Reuters in an interview.
Due to the financial meltdown, banks are unwilling to lend and buyers probably face difficulties in securing cash to purchase assets, he said.
Chiaro, speaking on the sidelines of the World Future Energy Summit in the United Arab Emirates, declined to give the value of the assets his firm planned to sell, but said: ‘It is in billions of dollars.’
Rio Tinto, the second largest uranium producer, has no plans to sell its majority stakes in Energy Resources of Australia and the Rössing uranium mine in Namibia.
‘We will have an energy business going as we have core assets in uranium mines that gives us significant energy footprint,’ he said.
‘We are happy with our stake in the Australian uranium business and we were even looking to expand production but deferred it due to the global economic situation. However, the capability exists,’ he said.
We have no plans to sell our stake in it, and we have no plans to sell our uranium assets in Namibia.’
Chiaro rejected speculation Rio Tinto may sell its 76 per cent stake in Australia’s Coal Allied Industries.
We have not sold our stake and we are very happy with our position and we are not looking to sell.’
Plans for an initial public offering (IPO) in its US coal business have been postponed due to poor market conditions, he said.
:The IPO was part of the sale process. We are pursuing both options, a trade sale and an IPO in parallel. Frankly, there is no IPO market right now, so we will wait till it improves.’
Rio Tinto’s joint venture hydrogen power project in the UAE capital, Abu Dhabi, is on track with engineering and design completed.
Construction is due to start next year and commissioning is set for 2013, he said.
Rio Tinto and BP hold a 20 per cent stake each in the project while Abu Dhabi’s Masdar holds 60 per cent.
The company is not pursuing any other joint ventures in the Middle East for the time being, he said. Giving an outlook for thermal coal prices, Chiaro said that due to the global slowdown and particularly in China, prices have begun falling. ‘How long the slowdown lasts, it depends, but market fundamentals have shifted in favour of buyers.’ – Nampa-Reuters
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