RIO Tinto has entered into exclusive talks with the US-based private-investment firm HIG Capital regarding its offer for Rio's European specialty alumina business.
The talks are in line with Rio's strategy to restructure its aluminium business by selling non-core assets and pursuing savings.
Rio did not disclose the terms of HIG's binding offer, but says it has entered a period of exclusivity in which it will respond to the HIG offer following consultation with unions.
The specialty alumina business employs 730 people and is the largest integrated supplier of non-metallurgical grade of alumina, with four production sites: Gardanne, La Bathie and Beyrede, all in southern France, and Teutschenthal in Germany.
Specialty alumina is produced by refining bauxite and is used to make ceramics, abrasives and glass. Non-metallurgical alumina accounted for about 8 per cent of global alumina production last year, or 4.9 million tonnes, according to the International Aluminium Institute.
HIG already has some experience with aluminium. The investment firm has invested in Signature Aluminium, an aluminium extrusion business based in Pennsylvania that has eight facilities spread across the US and Canada.
Rio's aluminium business has suffered in the wake of the financial crisis. It was forced to book an $US8.9 billion ($8.57bn) impairment charge in 2011 to reflect a fall in the value of the struggling division, which is also known as Rio Tinto Alcan.
Rio bought Alcan at the peak of the market in 2007 for $US38bn and has so far written off $US18.2bn of that value.
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