Mining giant Rio Tinto plc (RIO: Quote,RIO.L, RTNTF, RTPPF) said Saturday that it has received a binding offer for two of its unprofitable aluminum plants in France from Germany's largest aluminium producer, Trimet Aluminium SE. Financial terms of the offer were not disclosed.
According to Rio Tinto, the terms of the binding offer agreement for its St. Jean-de-Maurienne aluminum smelter and Castelsarrasin casting facility in France are conditional upon regulatory approvals as well as completion of an energy and partnership arrangement with Electricte de France SA or EDF (ECIFF.PK, ECIFY.PK).
The company added that it will respond to the offer following consultation with the relevant works councils.
Jacynthe Côté, chief executive of Rio Tinto Alcan said, "This is an important step towards the contemplated divestment of the St. Jean-de-Maurienne and Castelsarrasin assets. It was made possible through constructive dialogue with both Trimet and the French Government, particularly the Ministry of Industrial Renewal. The sale of these facilities underscores our strategy to streamline Rio Tinto Alcan, through the divestment of non-core assets, so that it is focused only on our lowest cost businesses."
Trimet Aluminium SE is Germany's largest aluminum producer. Founded in 1985, Trimet employs about 1,900 people that produce, cast, market and recycle aluminum in 12 sites with an international marketing network.
In a separate statement, Trimet said that the acquisition of the aluminum plants will enable it to continue its growth strategy and extend its portfolio of specialized light metal products.
The two aluminum plants produce aluminum wire rod that is used to make electric cabling for the energy industry and connecting elements for the automobile industry, among other things. Trimet noted that there was enormous demand for aluminum wire rod in the manufacturing industry in Europe.
Heinz-Peter Schlüter, owner and Chairman of the Supervisory Board of Trimet Aluminium SE, said, "The region in which the two plants are located was the cradle of the aluminum industry. We are both delighted and proud that we can contemplate maintaining production and saving jobs in Saint-Jean-de-Maurienne and Castelsarrasin."
Trimet said that the purchase deal will secure the long-term supply of aluminum oxide and electric power, key requirements for the production of aluminum. EDF will take a minority stake in the production plants.
In 2012, the St. Jean-de-Maurienne aluminum smelter produced 93,000 tons of primary metal. It employs 480 people.
The Castelsarrasin facility is a casting centre that produces aluminum wire for mechanical and welding applications. It employs 35 people and annually produces around 8,000 tons of finished product.
RIO closed Friday's trading at $42.16, down $.18 or 2.72 percent on a volume of 2.97 million shares.
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by RTT Staff Writer
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