Anglo-Australian mining giant Rio Tinto is planning to divest its stake in the Northparkes copper and | gold mine in New South Wales as a part of its plan to cut operational costs and raise shareholder returns.
The company has hired Macquarie Group to handle the sale of Northparkers, which was valued at $405m at the end of 2012, reports The Wall Street Journal.
Rio Tinto, which holds an 80% stake in the mine project, expects to raise $1bn from the sale.
The remaining 20% stake in the project is owned by units of Japan's Sumitomo Group.
The company is expecting a premium for this operation as it possesses sufficient resources for mining to continue for another ten years.
However, considering that several of Rio Tinto's competitors are also planning to sell their assets due to weak demand for commodities in Asia and low metal prices, potential buyers have many more options to choose from.
Earlier this year, Rio Tinto's new CEO Sam Walsh made a commitment to increase value for shareholders and announced that cash would be raised from divestures this year.
As part of this plan, the company has been divesting or closing non-core or poor-performing assets in order to reach its target of slashing costs by over $5bn by the end of 2014 and focusing its attention on profitable assets such as the iron ore mines in Pilbara region of Australia, which contribute to majority of its earnings.
Lower commodity prices over the last one year have in fact made several major miners to slash costs and halt projects.
Recently, Rio Tinto hired Deutsche Bank to find a buyer for its Clermont and Blair Athol thermal coal mines in the state of Queensland, and is planning to offload a stake of up to 29% in its Coal & Allied Industries unit in the state of New South Wales.
In addition, the company has put its Canadian iron-ore operations up for sale and is reviewing its diamonds division, which includes mines in Zimbabwe, Canada and Australia, and the Pacific Aluminium unit, The WSJ reported.
In late 2011, Rio Tinto combined higher-cost aluminum assets in Australia and New Zealand under a single company called Pacific Aluminium.
Image: Northparkes mine has sufficient resources to continue operations for another ten years.