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Sept. 30, 2019, 2:44 a.m. EDT

Rio Tinto scraps plans for sale or IPO of Canadian iron-ore unit

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By Rhiannon Hoyle


Reuters

Rio Tinto PLC has scrubbed plans for a sale or initial public offering of its Canadian iron-ore unit, following a yearslong effort to unload the business, according to a person familiar with the matter.

Rio Tinto /zigman2/quotes/202627887/composite RIO +2.57%   /zigman2/quotes/208934945/delayed UK:RIO +2.75%   /zigman2/quotes/200083756/delayed AU:RIO +0.90%  has been shopping around its 59% stake in Iron Ore Co. of Canada on-and-off since 2013, but hasn’t been able to find an agreeable price with potential suitors as iron-ore prices have waxed and waned.

Global miners including Rio Tinto have spent several years selling or spinning off assets in a bid to reduce debt and lift shareholder returns by focusing on only their most profitable or promising operations. Iron-ore prices this year surged to their highest value since early 2014 on concerns over a shortfall, but have since eased and are widely forecast to edge lower over the coming year.

Executives at Rio Tinto, which in Australia runs one of the world’s biggest iron-ore operations globally, had previously said they were under no pressure to offload the Canadian business. “I want to clean up the portfolio as quickly as I can but, at the same time, there will not be a fire sale,” Chief Executive Jean-Sebastien Jacques had said in 2017 of his strategy to sell assets.

The decision to tell bankers to stop working on the process for a sale or IPO for the Canadian unit was earlier reported by Bloomberg.

Iron Ore Co. of Canada produces iron-ore concentrate and pellets from mining operations and processing facilities in Newfoundland and Labrador. It also runs port facilities in Quebec.

The business is a joint venture between Rio Tinto, Mitsubishi Corp. /zigman2/quotes/208582984/delayed JP:8058 +0.76%  , which owns 26%, and the Labrador Iron Ore Royalty Income Corp. /zigman2/quotes/209631427/delayed CA:LIF -1.25%  , which owns 15%.

It recorded net earnings of $166 million for Rio Tinto in 2018, down from $235 million the year earlier. Its operations had been suspended for two months during the year amid labor negotiations.

/zigman2/quotes/202627887/composite
US : U.S.: NYSE
$ 60.67
+1.52 +2.57%
Volume: 1.76M
Jan. 17, 2020 6:30p
P/E Ratio
7.71
Dividend Yield
5.46%
Market Cap
$76.42 billion
Rev. per Employee
$852,406
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/zigman2/quotes/208934945/delayed
UK : U.K.: London
4,651.00 p
+124.50 +2.75%
Volume: 3.11M
Jan. 17, 2020 4:35p
P/E Ratio
7.64
Dividend Yield
6.65%
Market Cap
£75.52 billion
Rev. per Employee
N/A
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/zigman2/quotes/200083756/delayed
AU : Australia: Sydney
$ 106.19
+0.95 +0.90%
Volume: 1.06M
Jan. 20, 2020 4:10p
P/E Ratio
9.68
Dividend Yield
8.45%
Market Cap
$170.88 billion
Rev. per Employee
$1.14M
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/zigman2/quotes/208582984/delayed
JP : Japan: Tokyo
¥ 2,913.00
+22.00 +0.76%
Volume: 2.67M
Jan. 20, 2020 3:00p
P/E Ratio
8.80
Dividend Yield
4.53%
Market Cap
¥4413.84 billion
Rev. per Employee
¥181.63M
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/zigman2/quotes/209631427/delayed
CA : Canada: Toronto
$ 23.61
-0.30 -1.25%
Volume: 226,529
Jan. 17, 2020 4:00p
P/E Ratio
7.51
Dividend Yield
4.24%
Market Cap
$1.51 billion
Rev. per Employee
$54,358
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