Alcan packaging sale delayed by Rio Tinto

RIO Tinto has flagged a delay in the sale of its $US6 billion ($7 billion) Alcan packaging business until conditions are more favourable, but says it still plans to sell $US10 billion of assets this year. The company has raised $US3 billion of that amount so far as it looks to reduce debt it incurred in the purchase of Canada's Alcan last year. "It is our intention we should announce the sale of assets worth $US10 billion or more this year and that could include the packaging business," chairman Paul Skinner said. "We're driven in all these things by value and so whether or not the packaging business is sold this year will depend on getting a good price for the business." Mr Skinner said the packaging unit performed well in the first half, unlike Alcan's engineering business, which was also earmarked for sale. He said the packaging business would remain part of a broader $US15 billion target for asset sales. He did not elaborate on which assets might take the packaging business's place to raise the remaining $US7 billion required this year. Chief financial officer Guy Elliott declined to comment on the value of a possible coming float of Rio's US coal assets or how it was progressing. Pengana Capital fund manager Tim Schroeders said he did not think Rio would have trouble fulfilling the $US10 billion target and said the company was well into working through sales of a long list of assets. The Alcan assets were a focus of the report, with predator BHP Billiton having questioned the purchase. Chief executive Tom Albanese defended Rio's acquisition of Alcan, which saw first-half profit fall by a third to $US1.036 billion. "What we're seeing so far is stronger aluminium demand in China this year than we're seeing for copper, by almost a factor of two and even stronger than steel," Mr Albanese said. "I'm very pleased with the overall performance of that business," he said, adding the company was on track to deliver synergies of $US1.1 billion from the end of 2009. Mr Albanese said he still hoped to have an agreement to proceed with the Oyu Tolgoi copper and gold mine in Mongolia by the end of the year. Rio also issued an outlook for metals and minerals, saying demand from China would combine with supply constraints to present a sixth straight year of strong prices, a scenario unprecedented in the past 100 years. Source: The Australian