Rio Tinto Sells Stake in China Aluminum Venture (Updated)

Rio Tinto Group, the world¡¯s third- largest mining company, sold its stake in an aluminum smelter in China to a partner to help reduce debt.

Qingtongxia Aluminium Co. will buy Rio Tinto¡¯s 50 percent stake in the venture, Jim Singer, a Brisbane, Australia-based spokesman for London-based Rio Tinto, said without revealing the sale price. Calls to Qingtongxia weren¡¯t immediately answered.

Rio Tinto is cutting capital spending and selling assets to pay $38.9 billion of debt, mostly acquired when it took over Alcan Inc. last year, as aluminum prices slide. Demand for the metal in China, the world¡¯s largest user, may rise next year at the slowest pace since 1997, according to Beijing Antaike Information Development Co.

¡°The deal may be valued at several hundred million yuan,¡± Wan Ling, a Beijing-based analyst at CRU International Ltd., said by phone today. ¡°Rio may also sell its packaging and engineering product assets in China as part of a global strategy.¡±

Rio shares rose as much as 5 percent in Sydney trading and were up 4.3 percent at A$38.64 at 1:55 p.m. local time.

Alcan paid about $150 million in 2004 for the 50 percent stake in the smelter that can produce as much as 150,000 metric tons of the metal a year. Qingtongxia owns 30 percent with the remainder owned by Ningxia Electric Power and Investment Co.

¡°Completion of the transaction is expected in the first quarter of 2009, pending clearance of certain Chinese government approvals,¡± Singer said by phone.

The joint venture is Rio¡¯s only aluminum smelting plant in China and includes 43.5 percent of a coal-fired power plant.

Rio Tinto said last November it may sell as much as $30 billion of assets. It wants to sell Alcan¡¯s packaging and engineering product units, its talc unit and other mining projects.

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