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Rio Tinto set to sell Dunkerque aluminium smelter to UK’s ‘Man of Steel’

Wednesday, Jan 10, 2018

  Rio Tinto has accepted an offer for its Dunkerque aluminium smelter, Europe’s biggest producer of the lightweight metal, from Sanjeev Gupta, the acquisitive UK industrialist.

  The planned purchase, which could be announced as soon as Wednesday according to people familiar with the negotiations, is the latest in a spree of deals by Mr Gupta, who over the past few years has emerged from relative obscurity to build a business empire ranging from power plants and mines to steel mills and car component makers.
  It is not clear how much Mr Gupta’s company Liberty House has offered for the 280,000 tonne a year smelter, which is powered by the nuclear power supplied by EDF, but it is likely to be more than the $410m he paid for Rio’s for a much smaller Scottish plant in 2016, the people said.
  Originally a commodities trader, Mr Gupta has bought a number of distressed or unwanted industrial assets, with a vision of revitalising UK manufacturing based on recycling scrap metal and powered by renewable energy. He was dubbed the ‘Man of Steel’ in a recent BBC documentary charting his deal-making exploits.
  The entrepreneur has also expanded to Australia, most recently buying the Tahmoor coal mine from Glencore through the GFG Alliance, an umbrella group comprising Liberty House and Simec, a business founded by Mr Gupta’s father. That move was aimed at securing the future of Arrium, the troubled steel and mining company GFG acquired last year.
  Rio and Liberty House refused to comment on the deal, which was first reported by Metal Bulletin. The sale agreement with trigger a three month consultation period with French workers and other stakeholders. Once that has been completed the deal can go-ahead.
  For Rio, the planned disposal marks the latest step to streamline its portfolio and focus on its best-performing operations in iron ore, aluminium and copper. Since 2013, the Anglo Australian miner has sold almost $8bn of assets, including most of its coal business. This has helped the company to reduce debt and boost returns to shareholders.
  In a recent interview with the Financial Times, Rio’s chief executive Jean-Sébastien Jacques pledged to continue selling non-core assets saying: “what is important for us is not to be the largest company, it is to be the most profitable company.”
  As well as Dunkerque, the Anglo Australian miner is also looking to sell a 205,000 tonne a year aluminum smelter in Iceland and its Pacific Aluminium business, which analysts say could fetch more than $2bn and has also drawn the attention of Mr Gupta.
  It has also started a sale process for its remaining Australian coal assets that could generate a further $2bn in proceeds, according to analysts.
  The sale of the Dunkerque smelter follows a big run-up in aluminum prices. Over the past year the metal, used in everything from cars to drinks cans, has risen almost 25 per cent to $2,155 a tonne helped strong manufacturing activity around the globe and the closure of illegal smelting capacity in China.

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