Rio Tinto's Icelandic aluminum plant attracts Glencore: sources

LONDON (Reuters) - At least three companies including Glencore have expressed an interest in buying Rio Tinto’s aluminum assets in Iceland, Sweden and the Netherlands for up to $350 million, banking sources said.

FILE PHOTO: The Rio Tinto mining company's logo is photographed at their annual general meeting in Sydney, Australia, May 4, 2017. REUTERS/Jason Reed/File Photo

Rio Tinto restarted the sale process for the assets in late 2018, with the help of French investment bank Natixis, sources previously said, after Norwegian aluminum company Norsk Hydro pulled out of buying them, blaming a delay in getting European Commission approval.

Given Hydro is already a major player in the aluminum industry, the European Commission may have had competition concerns, the sources said.

As well as an aluminum smelter in Iceland, Rio has put on the block a 53% stake in a Dutch anode facility and 50% of the shares in a Swedish aluminum fluoride plant, which are ingredients in aluminum production.

Rio Tinto declined to comment.

After a year of volatility caused by U.S. sanctions and supply reduction at Hydro’s massive Alunorte alumina plant in Brazil, the aluminum market has stabilized, which could make a sale easier to agree.

Commodity trader and miner Glencore is among interested parties, the sources said. It had no immediate comment.

Glencore, which doesn’t directly own aluminum assets, has offtake agreements with other producers, including U.S. Century Aluminium, in which it has a more than 40 percent stake, and Russia’s Rusal.

Sources put Glencore’s agreements to buy aluminum from smelters around the world at a total of about 3 million tonnes or 10 percent of supply outside the biggest producer China.

German aluminum producer Trimet Aluminium was also named by the sources as one of the companies that had expressed interest, but it said on Thursday that it was not interested in buying any aluminum plant.

Iceland generates all its electricity from hydropower and geothermal energy. Rio’s aluminum plant therefore appeals to mining companies that face pressure from customers and investors to become more sustainable.

Producing aluminum requires huge amounts of energy, meaning it is also cheaper to use hydropower.

Rio sold an aluminum smelter in Dunkirk in France to Sanjeev Gupta’s Liberty House, which also bought the miner’s smelter in Lochaber, Scotland.

One of the sources said Liberty House has also shown an interest in the assets, but its balance sheet may be constrained after its acquisition, agreed last year, of seven European plants from ArcelorMittal for 740 million euros ($835 million).

Reporting by Clara Denina and Barbara Lewis. Editing by Elaine Hardcastle