LONDON (Reuters) – Miner Rio Tinto Ltd/Plc has begun the process of selling its market-leading talcs and borates businesses, picking investment bank Dresdner Kleinwort to run the deal, sources familiar with the matter said on Friday.
If successful, the deal will be a small step towards Rio’s (RIO.L) plans to sell $15 billion of assets to repay debt, while it simultaneously fights an unsolicited takeover offer worth some $60 billion from rival BHP Billiton (BLT.L).
The Anglo-Australian miner had planned to sell $10 billion of those assets this year but in October said it was reviewing that timeline given challenging financial markets.
This sale is at an early stage and is likely to draw interest from both industry rivals and financial investors, the sources said.
The sources said market turmoil and scarce debt financing made valuing the business difficult, but its smaller size might make the sale less challenging than those of Rio’s $5 billion packaging business, and its Alcan Engineered Products unit.
“These (assets) are somewhere nearer the sweet spot of being able to be acquired by both the financial community and the industrial community,” one of the sources said. “I know it will be double-digit numbers (of interested possible bidders).”
The businesses could be sold separately or in one block, the source said.
Rio Tinto Borax supplies nearly half the world’s refined borates, minerals used in fibreglass, detergents, and ceramics.
Sister company Luzenac produces more than a quarter of the world’s talc, which is used in paper, paints, plastics, ceramics, rubber, personal care and roofing.
Borax and Luzenac are part of Rio Tinto Minerals, which had earnings before interest, tax, depreciation and amortisation (ebitda) of $227 million in 2007, on revenue of $1.23 billion.
A spokesman for Rio Tinto in London declined to comment.
(Reporting by Quentin Webb and Eric Onstad; Editing by David Holmes)