By Jim Woods
Editor-at-Large, The Wealth Shield
When demand for your industry’s product wanes, the first instinct for many CEOs is to cut, slash and burn costs. Such is the case right now in industrial-metals mining stocks, where some of the industry’s biggest names are moving to divest their high-debt holdings as demand for commodities such as copper and iron ore decline and prices fall.
Most recently, U.K.-based mining stock Rio Tinto announced it was selling its majority stake in its Northparkes Australian copper and gold mine to China Molybdenum for $820 million. Given that Rio is one of the biggest mining companies in the world, the deal to divest some 80% in the Northparkes mine can be read as a clear signal that the company is less than bullish when it comes to global demand for copper.
A completed deal would push Rio’s asset sales to $1.5 billion so far in 2013, according to Citigroup’s Heath Jansen; earlier this year, Rio sold its Palabora mine for $373 million and the Eagle Nickel property for $325 million.