Alcan in focus as Rio slashes debt, cuts jobs

Dec 10, 2008 | 11:53 AM | Tom Jennemann

Rio Tinto's announcement that it plans to slash jobs and sell assets in an attempt to pay down its large debt levels has focused attention on the future of its Alcan unit, though analysts said it would be hard for Rio to bring itself to sell the Canadian aluminum producer—and perhaps even harder to find a buyer if it did.

London-based mining house Rio, which last year paid $38.1 billion in cash for Alcan, said Wednesday it plans to cut some $10 billion in debt, cut its global work force by about 14,000, reduce next year's net capital expenditure guidance to $4 billion from over $9 billion, and increase the number of assets targeted for investment.

The statement, which comes as demand and prices for the Rio's commodities show no signs of improving, also follows the collapse last month of BHP Billiton's $66-billion hostile takeover bid for the company and growing concern on the markets about Rio's debt levels. The company has about $38 billion of debt on its books.

Rio previously announced plans to sell $10 billion of assets in 2008, but to date has raised less than $3 billion. It has been trying to sell Alcan's engineered products and packaging operations, but has yet to find a buyer. ....