PARIS (Reuters) - Rio Tinto (RIO.L) is pushing ahead with plans to sell a century-old aluminium plant in the Alps of southeast France as the global mining group continues its retreat from a struggling aluminium sector.
The group’s Rio Tinto Alcan division that operates the Saint-Jean-de-Maurienne plant told Reuters the upcoming renewal of a 30-year-old electricity supply contract with EDF (EDF.PA) swung the balance in favour of selling a site that was among its less profitable.
The plant, which went into production in 1907 in the early years of the aluminium industry, had 431 workers at the end of last year, making it in the leading employer in the local area.
“We’re focusing our efforts on the sale process, which is progressing well,” a spokeswoman for Rio Tinto Alcan said on Wednesday. “We have received expressions of interest.”
The group expects to end “in a week or two” a first stage of preliminary offers before entering talks with interested parties about possible firm bids for the site, she said.
A sale could avoid the plant becoming the latest in a series of industrial sites in France to announce closures or mass layoffs, a blow to Socialist President Francois Hollande as he tries to allay fears over surging unemployment.
Rio Tinto already sold three plants in France this year that produce alumina, an ingredient in aluminium also used separately as an abrasive, as part of an estimated $8 billion (5 billion pounds) of aluminium assets put up for sale last year.
It also said earlier this year it was considering a sale of the Saint-Jean-de-Maurienne plant.
Rio Tinto wants to focus on its more profitable iron ore activities and its retreat from aluminium has been encouraged by sluggish prices and a weak European market hit by overcapacity.
Rio Tinto Alcan is continuing talks with EDF about a new electricity deal that would let it continue operating the plant, but the sale of the site “is the priority”, the spokeswoman said.
But the head of EDF said the aluminium maker had no willingness to reach a deal and had already decided to sell.
“The fate (of the site) has already been sealed, the matter is closed. Rio Tinto has already decided to stop,” EDF’s Chief Executive Henri Proglio said on Wednesday during a debate on energy organised by French parliamentarians.
His comments supported those of a source at Rio Tinto.
“We are planning to sell it in 2013 and it is on top of our divestment pile,” the source said. “We don’t see value in that smelter, it is not part of our strategy so we had been planning to shut it down or sell it for a while.”
The Rio Tinto spokeswoman said no decision had been taken yet whether to go ahead or not with a sale, and that a closure would only be envisaged if the sale process failed.
The French government has been acting as a facilitator in the talks between Rio Tinto Alcan and EDF, and the industry ministry is to host a delegation of union and public officials next Tuesday. The ministry declined to comment on the situation.
Saint-Jean-de-Maurienne is the smaller of Rio Tinto Alcan’s two primary aluminium plants in France, with its capacity of 135,000 tonnes only half that at Dunkirk on the north coast.
Rio Tinto Alcan is the descendant of former French aluminium maker Pechiney bought a decade ago by Canada’s Alcan which was later absorbed by Rio Tinto.
Additional reporting by Nick Vinocur and Benjamin Mallet in Paris, Catherine Lagrange in Lyon and Silvia Antonioli in London; Editing by Muriel Boselli and William Hardy