Rio Tinto to sell Scottish aluminium smelter to Liberty for £330m

24 November 2016

Rio Tinto is selling an aluminium smelter and hydro-electric power plants in Scotland to industrials group Liberty.

The assets in Lochaber are the mining and resources giant’s only operational assets in the UK, but their future fell into doubt after the company launched a strategic review at the start of the year.

However, worries over job losses among the 150 staff  employed there and a further 400 positions in the supply chain have been eased with news that Liberty, working with sister group Simec, is set to acquire the business for £330m.

The deal is being paid for through a combination of equity and funds raised through a securitisation.

It is commodities mogul Sanjeev Gupta’s latest acquisition as he builds up Liberty’s footprint in the UK, as part of his privately held group's expansion strategy.

Liberty has been busy buying up distressed industrial assets in Britain as a combination of high power prices, greater costs and international competition have led to them being put up for sale.

Mr Gupta added: "This transaction fits very well with our vision to develop a sustainable and competitive metals industry in the UK as a key part of our global industrial business.

"This is a natural next step for us in our Scottish investment programme and is a springboard for wider manufacturing growth, creating many more jobs in Scotland."

At the height of the steel crisis last year, Liberty re-opened a steel plant in Newport, Wales, and has since gone on to acquire several assets from steel giant Tata, which is currently assessing the future of its UK operations, as well as from Caparo, the industrial group which collapsed last year.

Most recently, Liberty reopened a mothballed steel plate mill in Dalzell, near Glasgow, which Tata had shut.

Liberty had tried to buy all of Tata’s UK steel assets before the Indian-owned company did a u-turn on the sale, in favour of a merger with European rival ThyssenKrupp.

The Lochaber business is unique in that the smelter in Fort William is powered by two nearby hydro-electric plants, which have the capacity to generate 90 megawatts of power.

As well as the plants themselves, the sale includes the 100,000-acre estate which captures rainwater to power the hydro-electric generators.

Lochaber is the smallest on nine smelters Rio owns worldwide, and has an annual production capacity of 47,000 tonnes of aluminium.

Alf Barrios, chief executive of Rio Tinto aluminium, said: “This is a value-creating sale for Rio Tinto and another example of refining our portfolio to focus on our tier-one assets."