Rio Tinto Ltd, the world's second-largest mining company, yesterday reached an agreement to sell its majority stake in the Northparkes copper mine in Australia to China Molybdenum Co, for $820 million (A$884.249 million).
In a statement to the Australian Securities Exchange, the London-based miner said that it is selling its 80-per cent stake in Northparkes copper and gold mine in central NSW to China Molybdenum.
Japan's Sumitomo Group, which holds the remaining 20 per cent of Northparkes, has the rights to match China Molybdenum's offer.
"Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy. We believe it will have a strong future under its new ownership. Rio Tinto will continue to manage Northparkes to the highest safety and environmental standards during the transition to the new owner,'' said, Rio Tinto chief financial officer Chris Lynch.
Private equity firms Carlyle Group and KKR & Co and Australia's copper miner OZ Minerals, Swiss metals producer Nyrstar and China's mid-tier resources company MMG Ltd had earlier been in the race to buy Rio Tinto's stake in Northparkes.
The Anglo-Australian miner, 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. (See: BHP Billiton to sell Pinto Valley copper mine to Capstone Mining for $650 mn)
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.
If approved by regulators and China Molybdenum shareholders the transactions is expected to close by the end of the year.