The quality of its assets is no longer to show

The ancient fallen Pechiney engineered products and packaging activities in the Rio Tinto anyway upon the purchase of Alcan in 2007 are likely not find licensee this year. Yesterday, in presenting the results of its operations in the 3rd quarter, the mining group said that the current market conditions have pushed him to question its objective yield in 2008 of non-strategic assets for a total of $ 10 billion. Obviously, Rio Tinto has the greatest difficulty to sell at a price "appropriate". The prospect of a global industrial crisis does not help the group led by Tom Albanese to finalise its plan of disinvestment to 15 billion dollars in total. The income from these disposals should be used to rebalance the Corporation's balance sheet, increased by a net debt estimated by Evolution Securities to near 43.5 billion.

For the time being, Rio Tinto did assignments to 26 of its 2008 program, said Luc Pez, analyst at Oddo Securities. Struck by BHP Billiton, it however should substantially reduce its debt to devote more resources to defend against the first global mining group. Tom Albanese cannot rely on a single weapon to convince its shareholders of the merits of independence: the good results of operations.

Of quality assets

In this field, Rio Tinto is not to fade. The quality of its assets is no longer to show. In the third quarter, the group established a new record for production in iron ore, to 42.4 million tonnes. This single product provided 46 of the result of the first half. Under strong downward pressure of prices for its products, the division of Rio Tinto Alcan (16 of the total profit in the first half) nor did bad figure. The extraction of bauxite to deliver 5 more ore than in the second quarter, to 9 million tonnes. Alumina production declined by 3 and that of aluminum remained stable compared to the previous quarter. The energy industry and minerals (11 of the overall profit in the first half) also displays good figures. Deliveries of coking coal have increased, quarter to another, by 7, to almost 2.2 million tonnes, and those of natural uranium by 11 to 3.5 million.

In contrast, Rio Tinto suffered respective declines of 24 and 17 of the mining production of copper and red metal refining. From January to end of June, copper and diamonds accounted for 27 of the result of the group. Refining was affected by the us of Bingham Canyon unit maintenance work, while mining has suffered from technical problems and a lower quality of the ore treated the giant Chilean Escondida mine.

Change in tone

About the activity and market Outlook, there is a change of tone in Rio Tinto. The time of the bright tomorrow seems to be gone. The Chinese market of raw materials (mostly iron ore), copper and aluminum, which the Group should draw some 20 of its revenue in 2008 according to Canaccord Adams, slows down, says Rio Tinto. "Lower prices mean that Chinese producers are facing pressure on margins which should lead to reduce their production", says the group. "It is likely that the vast majority of Chinese aluminum producers is already facing operational losses," it warns. In total, "it now seems clear that any potential rebound in the net demand will have to wait until next year." And this despite the continuation of the increase in investment and construction in China.