Rio Tinto considers float of Canadian iron ore business

reuters.com Company,  International,  Iron Ore 2018-08-10 11:15:00

Rio Tinto, the world's second largest listed mining company, is exploring a public listing of its Iron Ore Company (IOC) of Canada business, banking and industry sources said, as it focuses on boosting revenue from its flagship Australian assets.


Iron ore, which accounts for most of Rio's profit and is used in making steel, has provided healthy margins for years but the outlook is uncertain as major buyer China is expected increasingly to rely on recycling rather than importing raw material.


Following a commodity price crash in 2015, Rio put a string of assets on the block, mostly in coal, to decrease its debt load. In iron ore, its push to refocus has meant concentrating on Australia's Pilbara region, where it has lower costs and higher grades.


IOC, 59% owned by the Anglo-Australian miner, 26% by Japan's Mitsubishi Corporation and 15% by Labrador Iron Ore Royalty Company, is one of Canada's largest producers of iron ore. It had revenues of $1.9 billion in 2017.


Rio had tried to sell its stake in IOC in 2012 as it already deemed it a non-core asset but it withdrew the process, saying the sale was not essential.


One banking source said that offers from private equity funds and rival miners had not met Rio's target of between $3.5 billion and $4 billion back then.


Rio was now considering an IPO of its stake on the Toronto Stock Exchange (TSX) as part of its ongoing work to hold only its best assets, but the process was at an early stage and it had not yet hired a financial adviser, the banking source added.


Rio Tinto's revenues are more dependent on iron ore than its rivals. In 2017, iron ore made up more than 60% of Rio's earnings.


The Pilbara region of Western Australia produces high quality iron ore that sells at a premium and Rio invested heavily in the region's assets, installing driverless trains and maximizing productivity.


It is also poised to expand there, having approved $146 million of funding to undertake initial work at the Koodaideri iron ore project, ahead of a final investment decision expected by the end of the year.


IOC produces iron ore pellets and concentrate from operations in Newfoundland and Labrador, and runs port facilities in Sept-Iles, Quebec, as well as a 418-kilometre railway that links the mine to the port.


A labor dispute earlier this year that resulted in a two-month suspension of operations was part of the reason for Rio reducing its underlying core profit by $137 million compared with the 2017 first half, Rio Tinto said when it reported half-year results last week.


(Writing by Becky Du  Editing by Tammy Yang)
For any questions, please contact us by inqury@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 China Nov power coal price index hits six-mth low 2018-12-14

China's monthly-issued price index of power coal edged down 0.65% month on month to 520.09 yuan/t in November, reaching a six-month low, showed data from the National Development and Reform Commission

2 China steel futures prices extend gains as two cities order more curbs 2018-12-14

Shanghai steel prices rose for a third day in a row on December 14 after China's major steelmaking cities of Tangshan and Xuzhou asked mills to curtail output, amid concerns they will not meet their p

3 China fixed-asset investment up 5.9% in Jan-Nov 2018-12-14

China's fixed-asset investment (FAI) grew 5.9% year on year in the first 11 months of this year, according to the National Bureau of Statistics (NBS) on December 14.

4 China Coal Daily Track (Dec 14) 2018-12-14

Thermal coal Domestic market Production area In Shaanxi's Yulin, some coal miners reported sales pressures remained even after cutting prices. Small-sized miners in Shenmu and Fugu

5 China Nov crude steel output hits 7-mth low on plunging profit and winter curbs 2018-12-14

China's crude steel output fell to its lowest in seven months in November, data from the National Bureau of Statistics showed on December 14, impacted by shrinking margins in the sector and winter res

6 Bearish sentiment rises in Chinese coal market amid traders' fire sales 2018-12-14

Chinese spot thermal coal market clouded over with growing pessimistic mood after traders started clearing out their cargoes at ports along the Yangtze River. On December 13, CCI index fo

7 China Nov coke output rises 1.9% on yr, NBS 2018-12-14

China churned out 35.41 million tonnes of coke in November, increasing by 1.9% from a year earlier, showed data from the National Bureau of Statistics (NBS) on December 14. The volume was

8 Indonesian low-CV coal price firms up, yet upward space limited 2018-12-14

Both offer and settlement prices firmed up for Indonesian thermal coal with low calorific value in China's import market, following several days' rises that ended a prolonged weakening. Y

9 China Nov power output rises 4pct MoM amid improved demand 2018-12-14

China's power output ramped up 4% month on month in November, official data showed, thanks to rising heating demand from residential sector as temperature fell in the winter heating season.

10 World's energy consumption structure quartering by 2040 2018-12-14

Coal, oil, gas and renewable energy forms may take up 25% each by year 2040, a conclusion made jointly by International Energy Agency, Organization of Petroleum Exporting Countries, and International

Most Read Articles

1 Cold front hitting China's south & east – but coal traders may love it 2018-12-07

A strong cold front not only brings the first snowfall of this year to some northern cities, it also causes sharp temperature drop in the south. The National Meteorological

2 China coking coal rallies to 15-month high amid tighter supply 2018-12-07

Chinese coking coal futures jumped to their highest in nearly 15 months on December 7, supported by tighter supply amid safety checks at coal mines, while coke surged nearly 6% to a five-week high.

3 Weekly global coal market news summary (Dec 3- Dec 7) 2018-12-07

Indonesia's Dec HBA thermal coal price dips for 4th mth to $92.51/t Indonesia's Ministry of Energy and Mineral Resources has set its December thermal coal reference price, also known as Harga

4 Tangshan grapples with emissions discharged by steel mills 2018-12-07

Sintering machines and pelletizing devices equipped in steel mills in Tangshan city in northern China's Hebei province will be asked to suspend production for rectification till December 31, if they f

5 Shanghai steel rebar futures set for best week in 5 mths on glut concerns 2018-12-07

China's steel rebar dropped nearly 2% on December 7, but is poised for its best week in nearly five months, reflecting persistent concerns over surplus supply amid high utilisation rates at steel mill

6 Shanxi approves trial run of 6 coal mines with 16.4 Mtpa capacity 2018-12-07

Shanxi Energy Administration has approved 2 mines' requests of expanding previous planed trail run period and 4's proposals of starting trail run since November. The 6 coal mines with combined designe

7 A review of 1st Coking Coal Market Analysis & Blending Technology Application Summit 2018-12-03

The 1st Coking Coal Market Analysis & Blending Technology Application Summit co-hosted by Shandong Coking Industry Association and Fenwei Energy Information Services Co., Ltd. wrapped up successfu

8 China Coke Market Analysis and Forecast (Dec 2018) 2018-12-06

Despite strong support from coking coal prices, China's metallurgical coke market was badly hammered in November by steel price nosedive. In November, the market has experienced

9 China Nov coal import extends decline for 4th mth; down 17% on mth 2018-12-08

China imported 19.15 million tonnes of coal in November this year, down 17% from the previous month, showed the latest data released by the General Administration of Customs on December 8.

10 China spot thermal coal market may trend down further 2018-12-04

China's spot thermal coal market is forecast to further trend down in the high demand winter season, but the downside space could be limited, as downstream utilities have low demand for spot coal afte

Scan to download sxcoal.com mobile APP

X