China Molybdenum Co, the world’s fourth largest molybdenum and second largest tungsten concentrate producer, has agreed to pay US$820 million for Rio Tinto Group’s Northparkes mine in New South Wales (NSW), Australia, to gain its first overseas copper asset. The sale should be completed by the end of the year.

London-based Rio owns 80% of the mine with the balance held by Sumitomo Metal Mining Co and Sumitomo Corp. The sale is subject to these joint venture partners waiving or failing to exercise their pre-emption rights under the terms of the Northparkes Joint Venture Agreement.

The acquisition will give China Molybdenum control of a mine in Central West NSW near the town of Parkes that provided 43,100 tonnes of mined copper for Rio in 2012 as well as a specialist underground training centre. Citigroup said in a February report that the mine, which began operation in 1994, is valued at about $800 million.

It is the third-largest acquisition by a Chinese company of a mining asset announced this year as the number and value of China’s deals in the sector falls from 2012. “The acquisition is part of China Moly’s diversification to boost profit as molybdenum has been weak over the past few years in line with China’s sluggish steel market,” says Kevin Guo, an analyst with Guotai Junan Securities Co. “Production of copper enjoys a higher premium than other base metals.”

Rio Tinto’s chief financial officer Chris Lynch says, “The sale of Northparkes represents great value for our shareholders and demonstrates our continued focus and discipline in the way we allocate capital across the group. Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy. We believe it will have a strong future under its new ownership. Rio Tinto will continue to manage Northparkes to the highest safety and environmental standards during the transition to the new owner.

“The agreed sale of Northparkes follows our recently completed divestment of the Eagle nickel project in the United States while the Palabora sale is now unconditional and expected to close on July 31. As always, any decision to sell is driven by our focus on delivering the best value for our shareholders.”

The company considered selling Northparkes in 2009, and held onto it after copper and gold prices rose, Rio said in December that year.

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