* Rio Tinto CEO rejects idea of a fire sale of unwanted
* Says awaiting Mongolia approval to ship copper concentrate
* Should offset impact of disruption at copper mine in Utah
* Defends plans to expand iron ore mining as market softens
By James Regan
SYDNEY, May 9 Rio Tinto could be two
weeks away from gaining Mongolian approval to ship copper from
its Oyu Tolgoi mine, helping offset a slide in revenue from its
U.S. copper business as it faces pressure to slash costs and
sell non-core assets.
A landslide at the firm's Bingham Canyon copper mine in Utah
in April, which could result in over $700 million in lost sales
revenue based on Reuters calculations, was unlikely to force a
rethink on assets sales, Chief Executive Sam Walsh told
shareholders at the annual meeting in Sydney on Thursday.
There has been speculation that moves by Rio Tinto to sell
its Northparkes copper mine in Australia could be delayed until
full production resumed at Bingham Canyon.
"We are not expecting that that (the landslide) will have a
difference" on divestment decisions, said Walsh, adding the firm
would also not be draw into a "fire sale" of businesses.
Rio Tinto hired Macquarie Bank to sell its majority stake in
Northparkes, a source familiar with the matter told Reuters.
. Rio Tinto and Macquarie declined comment.
Japan's Sumitomo Corp. own 20 percent of the mine.
Walsh said the board was reviewing a number of non-core
businesses, in addition to those already earmarked for
divestment such as Pacific Aluminium and diamonds units.
Rio Tinto's share of Northparkes' copper output in 2012 was
43,100 tonnes - less than half the forecast 100,000 tonnes Rio
Tinto will lose at Bingham Canyon this year.
Walsh, named chief executive in January promising an era of
belt tightening, said he expected approvals from the Mongolian
government within two weeks to transport copper out of its huge
Oyu Tolgoi mine, which is costing $6.2 billion to build.
"We are still looking for some approvals in relation to
exactly how we transport and ship the material....that we expect
to receive in the next couple of weeks," Walsh said.
"I think we have moved well down the path in terms of
resolving issues the government had tabled with us, enabling us
really to move forward with the project," he added.
The approvals cover use of rail lines and shipping schedules
and could enable the mine to start shipping copper to customers
slightly earlier than an original mid-year target date,
according to Walsh.
At present, copper concentrate is being stockpiled at the
mine awaiting the approvals.
Oyu Tolgoi could help offset lower output from the Bingham
Canyon mine, where force majeure has been invoked on deliveries
of copper cathode.
An increase in copper supply would comes as the price of the
metal has climbed despite worries about demand in China. The
London Metal Exchange copper price stood at $7,346 a
tonne on Thursday, up 8 percent on this year's low of $6,742.
DEFENDS IRON ORE EXPANSION
Oyu Tolgoi, run by Rio Tinto and two-thirds owned by its
Turquoise Hill Resources unit, is a vital new source of
growth for the company, which is dependent on iron ore for
two-thirds of its revenue.
Oyu Tolgoi is expected to make up a third of Mongolia's
economy by 2020, and at full tilt produce around 450,000 tonnes
of copper and 330,000 ounces of gold a year.
Walsh was speaking after hosting his first annual meeting in
Australia since taking over from Tom Albanese, who was dumped
after the company suffered $14 billion in writedowns on its
Alcan and Mozambique coal acquisitions.
Rio Tinto Chairman Jan du Plessis was forced to defend plans
to expand in iron ore. The world's No.2 supplier is targeting an
annual production rate of 290 million tonnes this year and up by
a further quarter to 360 million tonnes by mid-2015.
Fund manager BlackRock and other shareholders want
Rio Tinto to slow spending and pay higher dividends.
Analysts have also suggested a pull back in iron ore
expansion plans might shore up iron ore prices and counter a
looming supply glut.
But Rio is one of the most efficient producers and with iron
ore prices of around $130 a tonne , the firm
enjoys, enjoys a margin of around $80 per tonne.
Du Plessis told shareholders the company would not be
"trapped into under investing in iron ore."
He also said Rio Tinto would stick to paying a steady
increase in dividends rather than a fixed payout ratio. There
have been calls for a 60-80 percent payout of profits.