Rio Tinto has informed the Board of Palabora Mining Co. Ltd. of its intention to divest its 57.7% effective shareholding in the company and has initiated a commercial process to sell its shareholding. Palabora’s principal asset is a copper mine in South Africa, with a current mine life that expires in early 2016. Studies are underway for a potential extension of the mine’s life to 2030, according to Rio Tinto, but it is no longer of sufficient scale to fit with the company’s strategy. Palabora also owns a magnetite stockpile and the future of value creation at Palabora is likely to involve beneficiation of the magnetite through on-site processing, an activity that is outside Rio Tinto’s strategic focus.
“Rio Tinto is no longer the natural owner of Palabora due to the limited opportunity to significantly expand copper mining,” said Andrew Harding, chief executive, Rio Tinto Copper. “We believe Palabora has a solid future under an owner who can develop the magnetite business alongside the existing copper and vermiculite operations. In the meantime Rio Tinto will continue to focus on running the operations efficiently and safely. We will continue engaging with employees, the South African Government and other stakeholders as the sale process develops and to ensure a smooth transition to a new owner”.