Rio TInto wraps up £2bn bids for Alcan

Rio TInto, the mining giant fighting off an unsolicited bid from BHP Billiton, is accelerating a disposal programme that could generate billions of pounds from the sale of its Alcan Packaging unit and its US thermal coal operations. Bids for the packaging business are understood to have been tabled last week, almost nine months after the two businesses were put on the block following a strategic review of Rio's assets in the wake of its acquisition of Alcan, the aluminium group. Sealed Air and Bemis, the American packaging groups, have expressed interest in the packaging business, which is said to be worth $4bn (£2bn). Rio is thought to have been close to a deal with Sealed Air late last year but pulled the proposed sale after the credit crisis hit the ability of potential buyers to raise debt. More on mining The division, which is being sold by Morgan Stanley, the investment bank, is the world's second largest supplier of speciality packaging and employs 31,000 people. Rio has told bidders it would prefer to sell the business as a whole, which may make it more difficult for private equity players to enter the fray, although Morgan Stanley could still break it up. A sale of the packaging business would put Rio's divestment programme firmly back on track. It has pledged to sell at least $10bn of assets this year on its way to a total of $15bn of disposals, which would be used to pay down the debt raised to buy Alcan. However, with half the year gone it has so far sold less than $3bn of businesses. Last week it took a major step forward by offloading its Kintyre uranium project in Australia for almost $500m. Rio is also understood to be seeking initial bids for its US coal unit, Energy America, with a deadline of Wednesday. A large number of bids are expected for the business, which analysts said could be valued at around $4bn. It employs about 1,675 people. Teck Cominco, the Canadian mining giant that focuses on copper and zinc, said expanding its coal operations was something that "appealed to us in concept". Xstrata and Anglo American have also been named in connection with the unit. The relative valuation of Rio and BHP Billiton will come under the spotlight again this week as Rio is due to publish its second-quarter production figures on Wednesday. Analysts will be keen to see whether the company has been able to boost production to take advantage of soaring iron ore and aluminium prices. Rio is also expected to update the market on its expansion plans . Source: telegraph