Rio Tinto Updates: Canadian Expansion Faces Headwinds, Divests Some US Coal Assets

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The diversified mining giant Rio Tinto (NYSE:RIO) has had some significant developments in the last couple of weeks that point to its restructuring efforts and an increased focus towards businesses that have a robust outlook going forward. In our posts about the company earlier this week, we discussed on how the company is eying the booming Titanium Dioxide market and a recent update, where the company has got control over Canada’s Hathor Exploration, a major uranium miner in the region. Rio Tinto has a product portfolio that spans across basic metals like iron ore, copper and aluminium to energy products like coal and uranium. It competes  with other mining giants like Vale (NYSE:VALE) and Freeport McMoran (NYSE:FCX), Barrick Gold (NYSE:ABX)

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Rio Tinto gains control over Hathor, but there may be issues

With 70 percent of the company’s shareholders accepting Rio Tinto’s offer, the Hathor deal is virtually sealed. However, there is a catch – according to the Canadian law, foreign companies are not allowed to own more than 49 percent of an operating uranium mine. ((Rio Tinto faces new hurdles on Canadian uranium, Reuters))

Now the company has only two options here that either there is an amendment in the law or it finds a Canadian partner to operate the mine with. Now, this may well be a news that Canada’s Cameco will be looking forward to as it was the only other company that was in the fray to gain control over Hathor Exploration.

Rio Tinto to invest US$2.7 bn in Kitimat Aluminum Smelter

The Rio Tinto board has approved an investment of $2.7 billion for the modernization of its Kitimat aluminum smelter, located in Canada. The modernization project will raise the annual production capacity of the smelter by 48 percent to approx 480,000 tons. It is also estimated that the modernization decrease the emissions by more than 50 percent. Rio Tinto continues to invest into its healthy aluminum assets while selling off the under-performing ones with an outlook to improve the profitability in its Aluminum division. ((Rio Tinto to invest US$2.7 billion to complete the modernisation of the Kitimat aluminium smelter in Canada, PR Newswire))

Rio completes disinvestment of Colowyo

In a recent update, Rio Tinto confirmed that it has sold its thermal coal Colowyo mine in Western Colorado to Western Fuels-Colorado LLC. The company has so far completed more than 20 divestments in its U.S. thermal coal mines, generating close to $11 billion in the sale proceeds. [1]

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Notes:
  1. Rio Tinto completes divestment of Colowyo mine, Reuters []