Rio Tinto to hang on to loss-making Pacific Aluminium
Global miner Rio Tinto signaled it has given up hope of ditching its Pacific Aluminium business, as it reported an 18 percent drop in first-half underlying earnings, hit by weaker iron ore, copper and coal prices.
Rio put Pacific Aluminium - which houses five aluminium smelters, a bauxite mine and alumina refinery in Australia and New Zealand - on the block in 2011, but has failed to find a buyer and decided not to pursue a spin-off to shareholders.
"Following a comprehensive review we have also determined that the divestment of Pacific Aluminium for value is not possible in the current environment and it will be reintegrated into the Rio Tinto Alcan group," Chief Executive Sam Walsh said in a statement.
Underlying earnings fell to $4.23 billion in the six months to June from $5.15 billion a year earlier, exactly in line with analysts' forecasts. It raised its dividend 15 percent to 83.5 cents, compared with analysts' consensus forecast of 84 cents.
Rio's shares have fallen 11 percent this year, heavily under performing a 7.8 percent gain in the broader market on worries about slowing growth in China, a potential oversupply of iron ore and the company's loss-making alumininum operations.
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