Toronto-listed Potash Corp. of Saskatchewan (PCS) will buy the potash division of Rio Algom (TSE) for $160 million, plus working capital. Rio retains a royalty interest in the relevant properties.
Although the division accounted for 12% of Rio’s operating profit in the first half of 1993, revenues and earnings had fallen from 1992 levels as a result of lower demand and prices for potash.
Assets of the division, which is operated by Potash Co. of America, include mines in Saskatoon, Sask., and Sussex, N.B., as well as a port facility at Saint John, N.B.
The agreement, subject to regulatory review, provides that PCS will offer employment to all personnel at the two mines.
Subject to final adjustments, the sale is expected to result in a modest tax loss to Rio, which should be offset by other non-operating transactions in the quarter.
Rio President Colin Macaulay said his company “will devote the proceeds of the sale, after repaying bank loans, to expanding its base metal activities in North and South America.”
Rio is developing the Cerro Colorado copper deposit in northern Chile at an estimated cost of US$290 million.
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