It's just working in an incremental fashion. But Rio oversees so many different businesses that it has to make sure the money it spends is going to the places that offer the most reward.Īnd while BHP made a sweeping change to do the same thing, Rio clearly isn't sitting still. And that's just good business for Rio, which in many ways is really focused on capital allocation. Will Rio sell Coal & Allied? It sure looks like that's the plan, with the end goal of refocusing on businesses with better growth prospects. If Rio wasn't looking to shop Coal & Allied, there would have been no point to altering its relationship with Mitsubishi Development, which used to own 20% of Coal & Allied but now owns 32.4% of just one of the mines Coal & Allied owns. That's because it's much easier to sell something if you're the sole owner. While Bengalla was the start, now that Rio owns 100% of Coal & Allied, don't be surprised to see another deal down the road. In the news release about the sale of the Bengalla coal business, Rio Tinto's head of copper and coal division Jean-Sébastien Jacques, used some interesting words to describe the deal: "This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets in the mining industry." Also, "It demonstrates our commitment to further strengthening our balance sheet, maintaining a disciplined approach to allocating capital across the Group and delivering strong returns for shareholders through the cycle." And my favorite: "Bengalla mine is a robust, well-managed business with a productive workforce, and we believe it will have a positive future under the new owner with different capital allocation priorities."Ī Rio Tinto mine in action. It also restructured the ownership of a coal joint venture, so that it controls 100% of Coal & Allied, which itself owns or shares ownership of a number of other coal mines. But it recently agreed to sell a coal mine in Australia for around $600 million.
Rio hasn't exactly followed along that path, because it's still widely diversified. BHP's goal was basically to spend money where spending money made the most sense - and get rid of the rest. Put simply, what was left after the spinoff were the higher-margin businesses with the longest resource lifespans. That was a strategic decision by BHP to focus on its most important and best-performing assets. The spinoff took on BHP's smaller businesses, leaving giant BHP focused on iron ore, metallurgical coal, copper, and oil.
0 kommentar(er)
