Minmetals Said Likely to Drop Out of Rio’s Canada BiddingZijing Wu and Matthew Campbell
China Minmetals Corp., the nation’s biggest state-owned metals trader, is likely to drop out of the bidding for Rio Tinto Group’s controlling stake in Iron Ore Co. of Canada, according to two people with knowledge of the matter.
Minmetals considers Rio’s asking price too high and has decided to focus more on its bid for a Glencore Xstrata Plc copper project in Peru, one of the people said, asking not to be identified because the information is private. Rio’s 59 percent stake in Iron Ore Co. may be valued at as much as $3.5 billion, Credit Suisse Group AG analysts said in June.
Global mining companies including Rio, BHP Billiton Ltd. and Anglo American Plc are seeking to sell some of their less-promising assets after a worldwide economic slowdown reduced consumption of raw materials. Steel-demand growth from China will slow in the next two years, according to Deutsche Bank AG.
Rio began a sale of its Iron Ore Co. stake this year to cut costs and strengthen its balance sheet, hiring Credit Suisse and Canadian Imperial Bank of Commerce to sell all or part of its interest, a person close to the matter said in March.
He Jinglin, a media-relations official at Beijing-based Minmetals, said he had no information regarding the sale. Illtud Harri, a spokesman for London-based Rio, declined to comment.
Teck Resources Ltd., Canada’s second-largest mining company, is also considering abandoning its bid for the Rio unit because of a wide valuation gap, two people familiar with the matter said earlier this month.
Rio has struggled to sell other units. In June, the company said it backed away from divesting its diamond division after failing to find a buyer and deciding not to pursue an initial public offering of the unit. In August, Chief Executive Officer Sam Walsh said a sale of Australian and New Zealand aluminum units “for value is not possible in the current environment.”
Minmetals is leading a group to bid for Glencore Xstrata’s Las Bambas mining project, which would be valued at about $5 billion, two people familiar with the matter said this month.
The metals trader plans to contribute about half the funding for the offer, while a unit of Chinese state-backed conglomerate Citic Group Co. would put in about 30 percent, the people said. China Reform Holding Corp., an investment company backed by China’s state assets regulator, may contribute the remaining 20 percent of the financing, they said.