'Sweetener': Yarwun could be bonus in Boyne Smelters sale
SPECULATION is mounting that both Boyne Smelters Limited and Rio Tinto's Yarwun refinery could be up for sale again.
The reason behind the possible sale is understood to have been brought on by Rio's wish to make "selective divestments" of its aluminium assets, as the price of aluminium struggles to regain its vigour among a tough global market.
Indicated in Rio's half yearly results, underlying earnings for aluminium dropped from US$793 million in 2015 to $377 million in 2016, representing a change of 52%.
It is understood three of Rio's Australian smelters would be put up for sale, with the Yarwun refinery as a possible "sweetener", as revealed by the Australian Financial Review.
"An investment bank has been engaged with sources pointing to Deutsche Bank which has handled the bulk of Rio's recent mergers and acquisitions work," it was reported.
"Divesting the aluminium assets has been tried several times previously, but this time, there appears to be a greater desire to clean up the division during the reign of new chief executive Jean-Sebastien Jacques."
The Observer reported last month that BSL could be sold for $5.2 billion, as Rio tries to also offload its Bell Bay Aluminium smelter in Tasmania, Tomago Aluminium in New South Wales and New Zealand Aluminium Smelters Limited, which it has been doing since 2011.
But with China running amok with its production of aluminium and prices only recently rebounding slightly from dramatic lows which began towards the end of 2014, it's unknown if Rio would be able to get enough demand for the sale of the four smelters.
However, and as stated in the AFR, companies looking to buy smelters in "high cost jurisdictions" would also be likely to be in the market for alumina refineries, which may put the Yarwun refinery "on the (chopping) block".
"Rio would be happy to keep (Yarwun), but if a sweetener is needed, we reckon (the CEO) won't hesitate to add it to a package," it was reported.
Rio CEO, Jean-Sebastien Jacques, took the top job on July 3 and was known for streamlining the business when he was head of the copper and coal division.
According to the London Metals Exchange, aluminium is trading at US$1629 per metric ton.
RIO TINTO'S ROAD TO RECOVERY |