Rio Tinto Asset Sales: RTIT & Boron (Part 3)
Total potential proceeds of $2.9-$3.5B
This piece concludes a 3-part series exploring Rio Tinto assets currently under strategic review. Part 1 looked at US Borates, whilst Part 2 looked into Richards Bay Minerals, part of Rio Tinto Iron and Titanium (RTIT).
In this article, we look at our final valuation estimates for RTIT and US Borates, explore potential buyers, and discuss Rio Tinto’s broader strategy behind the divestments.
Total Potential Proceeds: $2.9-3.5B
RTIT: $1.9-2.3B
Borates: $1.0-1.2B
For RTIT, our estimate of $1.9-2.3B contrasts with $1.8B (implied carrying value after the $120M impairment in 2025) and $3.3B of capital currently employed in the business. We value Quebec Iron & Titanium stand-alone at $1.2B and Richards Bay Minerals at $0.7B ($1.0B on a 100% basis).
RTIT’s weak recent performance, largely driven by overcapacity in Western markets and growing supply from Chinese players, will likely weigh down potential bids. Rio Tinto could have potentially maximised proceeds in 2022 when EBITDA peaked at $799M (now $148M).
For Borates, our estimate of $1.0-1.2B compares with Bloomberg’s reported estimate of $2B and $0.4B capital employed. At 2025 EBITDA of $210M, the asset would need to sell at a 9.5x multiple to justify that valuation.
Rio Tinto already tried to sell the borates business in 2008, but opted to retain the asset in 2009 after bids came in that were too low. Analysts at the time valued the combined borates and talc business at $1.2B.
Divestment pathways
Rio Tinto has gradually dismantled its old Energy & Minerals division over the past decade as assets such as coal, uranium, and diamonds were either sold or wound down. IOC was moved to the Iron Ore product group in 2025, leaving RTIT and Borates as the last businesses from that portfolio still inside Rio today.
Both assets are nominally world-class within their respective markets, but are increasingly at the fringe of Rio Tinto’s strategic and capital allocation focus. RTIT has struggled in recent years amid oversupply in the Titanium market, whilst Borates remains a strong business in a mature market.
For RTIT, although Rio Tinto would likely prefer to divest it as an integrated unit, the sheer size of the combined business compared to existing players and RTIT’s poor recent financial performance makes a divestment tricky.
In light of this, I think there are 3 key archetypes of buyers for RTIT’s assets:
A mineral sands miner seeking downstream integration. A logical buyer could be a mineral sands miner lacking the smelting capability of either RBM or QIT. Having this capability would allow a buyer to capture more value across the processing chain AND solves the underlying issues with RTIT’s smelters - they are operating below capacity. A miner with additional feedstock would lift utilisation and help cover the high fixed costs of the smelters. Iluka strikes as a potential candidate given their scale and financial health, Kenmare is rather small, whilst Eramet sits largely upstream after selling its Norwegian smelters to Ineos in 2023.
A Chinese buyer looking to secure feedstock. China dominates titanium dioxide pigment production but remains partially dependent on imported feedstock even as domestic supply increases. Richards Bay Minerals could be particularly attractive given South Africa is generally more accessible for Chinese capital compared to Canada. Likely candidates include producers such as LB Group and Pangang Group. An asset-for-equity swap with Chinalco could also be on the cards.
A mining investment fund. Specialist funds such as Appian, Orion, or EMR could see an opportunity to buy the assets at a cyclical low and turn the assets around. Such a buyer could also make tougher decisions in restructuring the business and look to exit once market conditions improve.
Rio’s Borates business is solid and free cashflow positive, but the market for refined borates is rather small, unlikely to grow, and already highly concentrated. Turkey’s Eti Maden controls ~60% of supply, Rio Tinto captures ~30%, with the remainder being held by small unlisted players. The issue for Rio Tinto will be finding a buyer that actually cares.
Similar to RTIT, a mining private equity house like Appian or Orion could be interested in the assets. But without a burning platform of undervaluation or market growth - I struggle to see how they might be interested.
Possible buyers could be a specialty chemicals or industrial minerals player like ICL or Imerys. Although these companies don’t currently mine or produce borates, they share much of the same customers/end-markets and the assets would naturally sit alongside existing portfolios supplying agriculture, manufacturing, and specialty chemical markets.
Another possible buyer that has been floated in the media could be Ioneer, who is developing a nearby lithium-boron deposit. Such a deal could resemble the reverse takeover used by Stanmore Resources when acquiring BMC. This would require a substantial equity/debt raise or a JV partner to support such a transaction.
More broadly, the window of opportunity for Rio Tinto to list a diversified minerals business consisting of Borates, Titanium, and Diamonds is probably gone given the depletion of both Argyle and Diavik (alongside the horrid state of the diamond industry) … but it could of been an interesting thing to do in an alternate 2010s timeline …
Strategic rationale for divestment
Finally, I wanted to explore why Rio Tinto is looking to divest these assets. In many ways, such questions on portfolio mix are a lot more interesting than the specific valuation of the assets themselves.
I’ll leave you with two charts.
The first chart one is pretty simple: the proportion of earnings from RTIT and Borates has fallen from 26% in 1997 to just 3% in 2024.
In summary - these businesses are insignificant to Rio Tinto’s earnings and you could argue that Rio is no longer the natural owner for the businesses.
The second chart however perhaps opens up more questions than it answers …
The x-axis shows the capital employed in the business, whilst the y-axis shows the return on capital. Multiply them together … and you get net earnings (Rio Tinto uses a slightly different definition to ROCE than others like BHP, but it’s roughly the same metric). This chart is routinely paraded by BHP and is awesome!
Thicc businesses with high returns on capital: elite cash cows you want in your portfolio. These are your WAIOs, Pilbaras, Escondidas of the world.
Milk.
Narrow businesses with high returns on capital: cool to have, but somewhat immaterial to the business given their lack of scale.
Grow or sell.
Narrow businesses with low returns on capital: bad to have, but similar to the above … also immaterial to the business.
Fix, then sell.
Thick businesses with low returns on capital: these are the worst assets to have in your portfolio. They tie up huge capital and management often spend an inordinate amount of time (and money) trying to turn them around. I’ve often thought Alcan’s assets have been a sacred cow for Rio Tinto and this chart continues to show that. Sure, Pacific Aluminium is bumped up due to numerous impairments reducing the denominator… but it’s still undeniable that Rio’s Atlantic smelters generate mediocre returns relative to the money invested in them. (It’s also a bit worrying seeing how much invested capital is in the Lithium business).
Back to RTIT and Borates however … we see two tales here.
Borates is a narrow business with high returns. It was a cool business to have, but at this point it doesn’t move the dial for Rio Tinto. I continue to think it’s a valuable asset with strong geopolitical merits - but selling it makes sense from a portfolio perspective, and it’s a GOOD time to sell given its healthy financial position.
RTIT on the other hand is a moderately thick business currently generating negative returns. 2022 was an okay year, but apart from that - it has consistently generated returns that are likely below Rio’s cost of capital.
Now might be the wrong time to sell RTIT … but Rio probably has realised that the timeframe to turnaround these assets is probably very far away, and the solution likely lies more on the demand-side than within their control.
And as the saying goes …
Rough models to play around with here. Let me know if you’d like me to take a look at a specific business or mining stock!
