Rio Tinto firms on selling its Alcan aluminium division

Rio Tinto hit a five-month high amid speculation that the miner was moving closer to selling its Alcan aluminium division.

Rio finance director Chris Lynch hosted an analyst roundtable this week following its decision to shelve the sale of its Pacific Aluminium and fold it back into Alcan.

He said management was now focused on understanding the business.

While closing parts of Pacific Aluminium would have disrupted the sale of that unit, the necessary cost cuts would be easier within Alcan, the broker argued.

Rio paid $38.1bn for Alcan in 2007, at the peak of the aluminium cycle. Analysts now value the division at about a third of that.

Rio added 2.2 per cent to £32.63, with the stock rallying for a fourth day in tandem with the wider mining sector.

Since hitting its lowest level since 2009 last month, the FTSE’s large-cap mining index has rebounded 23 per cent.

Antofagasta rose 2.2 per cent to 979p while Glencore took on 2 per cent to 307.5p as Credit Suisse repeated its “outperform” advice.

It forecast that Glencore can save $1.5bn a year by 2014 from its Xstrata takeover, which would be three times management’s official target.

Fresnillo climbed 5.6 per cent to £11.65 after UBS started coverage of the silver miner with a “buy” advice and a £12.50 target.

The miners’ strength pushed the FTSE 100 up 0.6 per cent, or 37.6 points, to 6,611.94.