Pacific Alumina business sale may be on hold

The global mining giant Rio Tinto which had its performance in 2010 overshadowed by the profit line achieved by its only major rival, BHP Billiton, may put its sale of Pacific Aluminium on hold.

The company’s chief financial officer told reporters in Melbourne yesterday that at present conditions were tough to be considering selling the Pacific Aluminium business. The controlled Tiwai Point smelter near Bluff on New Zealand’s South Island is part of Pacific Aluminium.

Rio Tinto is looking to spin-off Pacific Aluminium after taking a write-down for the year of $A8.9 billion.

While Rio’s aluminium business was the millstone in a performance which resulted in a group operating profit of $A5.39 B – a 59% slump on the previous year -- the blame should not be aimed purely at Pacific Aluminium as the company’s global aluminium business performed badly, not helped by the high pre-global financial crisis price of $US39 billion it paid for the big North American producer Alcan.

That Alcan deal, which put Rio Tinto into financial stress after the advent of the GFC, was undoubtedly a factor behind the company not paying its chief executive Tom Albanese a bonus on the latest financial year result.

One of the shining lights for Rio Tinto was the continuing strong performance in the December quarter of its iron ore operations in Western Australia’s Pilbara region, where it is spending billions on expanding mining, railway and port facilities.