Rio Tinto and Anglo sell Palabora to Chinese group

Mining giants Rio Tinto (ASX, LON, NYSE:RIO) and Anglo American (LON:AAL) are selling a 74.5% shareholding in the South African copper company Palabora Mining to a consortium of Chinese and South African firms, in a deal valued at about $611 million.

South Africa's Industrial Development Corporation (IDC) and three Chinese firms will pay $12.70 per share for the stake, Palabora said Tuesday.

Rio Tinto has already reached a binding agreement to sell its 57.7% stake in Palabora for $373 million to a consortium of South African and Chinese entities led by the IDC and Hebei Iron & Steel Group.

According to Rio Tinto's statement, the sale is subject to customary regulatory approvals in South Africa and China, which are expected to take four to six months.

“Palabora is a good business but is no longer a natural fit within Rio’s portfolio. Selling our stake reflects Rio’s policy of continually reviewing our portfolio to generate best value for shareholders,” said Rio’s CFO Guy Elliott.

Meanwhile, London-based Anglo American has also announced that it has reached a binding agreement to sell its 16.8% interest in Palabora to the same consortium for approximately $103 million.

The company’s share price was up nearly 11% on the news.