Rio Tinto on Verge of Selling Pacific Aluminium to GFG Alliance

Sanjeev Gupta

Anglo-Australian mining giant Rio Tinto Group is reportedly in talks with Sanjeev Gupta’s Gupta Family Group (GFG) Alliance for the sale of Rio’s aluminium operations in Australia and New Zealand.

A report by the Financial Times indicates that sources tell them that Gupta is flying to Australia to participate in discussions regarding Pacific Aluminium (PacAl) as well as to inspect a power station at Gladstone, which is reportedly part of the deal in question.

In addition to the power station, PacAl’s assets consist of three smelters in Australia and another smelter in New Zealand. The company employs over 2,000 individuals, and posted a first-half total net income of US$92 million, a jump year-on-year from last year’s first-half total of US$29 million.

Although talks may founder in the short term, Gupta has long expressed an interest in the purchase of PacAl. Such an addition to the GFG portfolio would progress the firm significantly in the direction of its stated goal of becoming a global industrial conglomerate with renewable energy, metals, power, and financial assets.

GFG isn’t the only party angling for Rio Tinto’s aluminium assets, however. United States aluminium smelter Century Aluminum is rumored to have its eyes on PacAl, and so is Switzerland’s Glencore plc, who, as it happens, owns a 47-percent interest in Century.

Though none of the parties would speak on the subject in an official capacity, Rio’s CEO Jean-Sebastien Jacques has gone on record many times in the past year speaking of the firm’s willingness to sell PacAl to the right buyer.

As to Gupta, should the sale go through, it would be yet another purchase in a string of deals he’s completed on the continent. He purchased mining and steel firm Arrium this summer, besting competition from a South Korean equity group. Gupta has gone on record as saying that he plans to invest US$1 billion in the firm’s steel operation, and has gone so far as to pledge to relocate to Australia to personally oversee the upgrades himself.



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