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.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project