Rio Tinto studying options in Mozambique following 3.0bn-dollar write-down

22nd Jan 2013 14:22

Rio Tinto is said to be looking at options for its Mozambique business after it was forced to write down the value of the unit by a whopping three billion dollars.The Financial Times reported on Tuesday, citing people close to the matter, that Rio is "evaluating options" which could include partnering with rival mining companies on rail infrastructure.Meanwhile, The Australian Financial Review has said that the firm could bring in an Indian or Chinese partner to lessen its risk profile and funding burden in Mozambique.Shares were down 0.39% at 3,541p by 14:49 on Tuesday.The news comes after Chief Executive Officer (CEO) Tom Albanese agreed to step down on January 17th following the revelation that Rio would recognise a non-cash impairment charge of around $14bn in its 2012 results. This comprised a write-down of $3.0bn relating to Rio Tinto Coal Mozambique, which includes the Riversdale Mining company it acquired in 2011, as well as a $10-11bn reduction in the value of its aluminium assets.As for Mozambique, Rio said that the development of infrastructure to support the coal assets was "more challenging" than it had first thought. In a statement last Thursday, the firm said: "Rio Tinto sought to transport coal by barge along the Zambezi River, but this option did not receive formal approvals. These infrastructure constraints, combined with a downward revision to estimates of recoverable coking coal volumes on the RTCM tenements, have led to a reassessment of the overall scale and ramp up schedule of RTCM, and consequently to the impairment announced today."Chairman Jan du Plessis labelled the Mozambique write-down as "unacceptable".