Rio Tinto agrees $2bn asset sale

Rio Tinto bought Alcan two years ago

Rio Tinto has agreed to sell four business units of its Alcan aluminium subsidiary for $2bn (£1.2bn), as it seeks to trim its debt burden further.

The Anglo-Australian mining giant is selling the four packaging businesses to Australian group Amcor.

Rio Tinto only bought Alcan in 2007, but built up significant debts to help fund the $38bn deal.

Amcor is buying Alcan's tobacco and drugs packaging units, and its European and Asian food packaging arms.

The announcement comes a month after Rio said it had agreed to sell Alcan's American food packaging business for $1.2bn to US company Bemis.

Analysts said the problem for Rio was that it paid too much for Alcan, buying the firm when global metal prices were at record highs.

"Now is the right time in the economic cycle to be making acquisitions as asset values are substantially lower than they have been for many years," said Amcor chief executive Ken MacKenzie.

Rio said Amcor's offer was good for all its shareholders.

The Alcan divisions being sold employ about 14,000 staff at 80 locations in 28 countries.

The sale is still dependant upon regulatory approval in the US and Europe.

China row

Rio raised $15.2bn in July through a share issue in order to bolster its finances. The company had launched the rights issue after it pulled out of a deal that would have seen it receive a $19.5bn investment from China's Chinalco.

However, Rio scrapped the Chinalco deal in favour of a tie-up with rival giant BHP Billiton.

Last week, four Rio employees were formally arrested in China on suspicion of stealing Chinese trade secrets and taking bribes.

The four have been in police custody in Shanghai since early July. Rio Tinto denies any wrongdoing.