Rio Tinto to sell Alcan packaging to Amcor for $2bn

Rio Tinto is set to sell its Alcan packaging business to Australia's Amcor for $2bn (£1.2bn) as the miner continues the divestment programme stalled by the global credit crunch.

The deal – which includes the group's European food and global tobacco and pharmaceutical packaging units – follows last month's sale of Alcan's US food packaging business to Bemis for $1.2bn. Both are part of Rio Tinto's plans to pay down the $38bn debt pile accrued from its top of the market takeover of Alcan in 2007.

The vast debt became a major problem for Rio Tinto when global recession hammered commodity markets last autumn. Difficulties selling off non-core Alcan businesses, such as packaging, made the situation even worse. First, last November, BHP Billiton retracted its hostile takeover bid and walked away. Rio Tinto's management – faced with $8.9bn of debt repayments looming this year, and another $10bn next – then brokered a $19.5bn tie-up with China's state-owned Chinalco to help plug the gap. But shareholder wariness, combined with fortuitously rising commodity prices, put paid to the proposal in May. Instead, Rio raised $15.2bn in a rights issue in June.

As well as the Alcan divestments, this year so far Rio Tinto has also sold its interest in the Ningxia aluminium smelter for $125m, its potash and Brazilian iron ore assets for $1.6bn, and a US coal mine for $761m. Rio Tinto has agreed a period of exclusivity with Amcor, after which it will respond to the offer. Meanwhile, other assets also remain on the market, including Alcan's beauty packaging unit and its engineered products division.

Guy Elliott, the Rio Tinto chief financial officer, said: "We have already agreed to asset sales of $6.6bn over the last 18 months, despite the challenging financial markets. We believe Amcor's offer is in the interests of all stakeholders."

Meanwhile, Rio Tinto remains mired in controversy in China after four of its employees were formally charged with bribery and stealing commercial secrets by the authorities in Shanghai last week. The four, including the Australian Stern Hu, have been in custody since July, and Mr Hu faces seven years in prison. Rio Tinto has consistently denied that its employees were involved in any wrongdoing.

The fracas comes against the backdrop of increasingly acrimonious negotiations over bulk iron ore contracts. China has repeatedly rejected the 33 per cent price cut agreed between Japan's steel mills and the big three suppliers, Rio Tinto, BHP Billiton and Vale. But this week's 35 per cent reduction agreed between China and Australia's Fortescue Metal suggests a softer stance than the 45 per cent price cut China has demanded to date.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
News
Mock the tweet: Ukip leader Nigel Farage and comedian Frankie Boyle
peopleIt was a polite exchange of words, as you can imagine
Life and Style
fashion
Life and Style
Britons buy more than 30 million handsets each year, keeping them for an average of 18 months
tech
Arts and Entertainment
TV Presenters Ant McPartlin and Dec Donnelly. Winners of the 'Entertainment Programme' award for 'Ant and Dec's Saturday Night Takeaway'
musicAnt and Dec confirmed as hosts of next year's Brit Awards
Arts and Entertainment
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain