Rio Tinto sells North American assets to Vale for $1.6 billion

31 January 2009

Rio Tinto has sold its undeveloped Potasio Rio Colorado (PRC) potash project in Argentina and its Corumbá iron ore mine in Brazil and the associated river logistics operations in Paraguay to Brazilian miner, for $1.6 billion.

Potasio Rio Colorado, Argentina's first potash project, is a tier 1 asset located in the Malargüe department in the province of Mendoza. The project is in the feasibility stage and if fully developed will allow Argentina to become one of the world's major producers of potash, an essential crop nutrient. The life of the mine is projected to last more than 50 years.

The Corumbá mine operations are located in western Brazil, in the state of Mato Grosso do Sul. The iron ore is mined from an open pit, processed on site then barged by Transbarge Navegación (Rio Tinto 100 per cent) along the Paraguay River for onward delivery to South American and European customers. Corumbá currently has an annual capacity of 2 million tonnes.

The sale of its potash project in Argentina, fetched the miner $850 million while the Corumbá iron ore mine in Brazil was sold for $750 million, which will enable the company to reduce its $42 billion debt burden by $1.6 billion.

"This transaction demonstrates the depth and quality of our asset portfolio and our ability to unlock value for shareholders despite tough credit markets and economic conditions," said Guy Elliott, chief financial officer of Rio Tinto.

"This is a very positive step towards meeting our commitment to reduce debt by $10 billion in 2009," he added.