LONDON (Reuters) - Rio Tinto and Anglo American said they plan to sell their stakes in Palabora Mining Co Ltd, South Africa’s only producer of refined copper, as Palabora’s flagship mine is too small for the two majors.
Rio’s 57.7 percent holding in Palabora is worth about $565 million, according to the copper producer’s market capitalization, while Anglo’s 16.8 percent stake is worth about $165 million.
Rio said it has started a commercial process to sell its shareholding, but did not give further details.
Palabora’s main asset is a copper mine that produces about 80,000 tonnes of refined copper a year, supplying most of South Africa’s copper requirements and exporting the rest.
The current mine life is early 2016 and studies are underway to extend operations until 2030. However Rio said future value creation at Palabora will likely come from on-site processing of magnetite, an activity outside of its strategic focus.
“Rio Tinto is no longer the natural owner of Palabora due to the limited opportunity to significantly expand copper mining,” said Rio Tinto Copper chief executive Andrew Harding on Monday.