Rio Tinto announces $3.2b buyback of Australian-listed shares

One of the world’s largest metals and mining corporations Rio Tinto Group has reportedly opted for a $3.2 billion buyback mainly focused on its Australian-listed shares. As per reliable sources, the company is planning to fund the latest round of returns using profits from the sale of its last remaining Australian coal assets. Reportedly, the company negotiated to divest its coal assets for prices considered very high by observers.

Rio announced that it would hold an off-market buyback for its Australian-listed stock for up to 41.2 million, valued at about $A2.7 billion along with on-market purchase of its London-listed shares.

According to sources familiar with the matter, the company would return $A4.4 billion to the shareholders with the proceeds received from selling Winchester South, Hail Creek, and Valeria and Kestrel coal assets in March. The company may also issue extra returns to its shareholders, by selling its unfinished Aluminum Dunkerque smelter in France valued at $500 million.

Jean-Sebastien Jacques, Chief Executive of Rio Tinto, was quoted saying that returning coal disposal profits worth $3.2 billion demonstrates the commitment of the firm to capital discipline and offering sector-leading shareholder returns.

Sources have reported that the tender period is slated to open in October and close in November. Last day shares on the ASX can be acquired by investors eligible for the buybacks and franking credits with regards to the buyback, cite sources.

Analysts from Bank of America Merrill Lynch stated that Rio Tinto was expected to announce additional share buybacks in 2019 as more asset sales are likely to be concluded by next year.

As per the company, the time and form of shareholder returns that would be funded by unfinished asset disposals would be declared along with its 2018 full year results. Reportedly, shares of the company increased by 3.6 percent to $78.10 following the announcement.