Rio said it had reached a binding agreement with a consortium of South African and Chinese entities to sell its 57.7% stake in the Palabora Mining Company.

Furthermore, joint venture partner Anglo announced it to would sell its 16.8% interest in Palabora for about $A98 million.

Rio chief financial officer Guy Elliot said Palabora was no longer considered a core asset to its diversified mining business.

“Palabora is a good business, but is no longer a natural fit within Rio Tinto’s portfolio,” he said.

“Selling our stake reflects Rio Tinto’s policy of continually reviewing our portfolio to generate best value for shareholders.”

Rio will continue to run operations efficiently during the handover to its new owners.

The new owners include international steel producer Hebei Iron & Steel Group, which will take a majority 35% stake, The Industrial Development Corporation of South Africa (20%), Tewoo Group (20%) and privately owned Chinese trading company General Nice Development through a 25% stake.



The sale is subject to customary regulatory approvals in South Africa and China, which will take four to six months.

Rio first flagged it was looking to divest its interest in Palabora last September after confirming it had kicked off a commercial sale process.

At the time, Rio said the mine was no longer of sufficient scale to fit with its strategy.

Palabora has a current mine life until early 2016, but studies are underway for a potential extension to beyond 2020.

During the September quarter, Rio’s share of refined copper output from Palabora totalled 2700 tonnes, down 54% year-on-year and also represented a 62% drop in the June quarter.

Rio blamed the lower output on the failure of an ore-hoisting shaft guide rope in July which restricted ore milling.

A safety incident at the mine during the quarter also halted production.

Other assets Rio is reviewing for divestment include its aluminium smelting business, Pacific Aluminium, and its diamond business.

Shares in Rio were trading up 0.6% to $62.15.