COLUMN-BHP, Rio deals show lack of options beyond shareholder returns – by Clyde Russell (Reuters U.S. – July 31, 2018)

LAUNCESTON, Australia, July 31 (Reuters) – Two recent deals by the world’s two biggest mining companies both looked positive for shareholders, but also underscore the challenges facing major commodity producers.

BHP Billiton last week agreed to sell its U.S. shale oil and gas assets for $10.5 billion, while Rio Tinto appears on track to exit its troubled investment in the giant Grasberg copper and gold mine in Indonesia for about $3.5 billion.

Both deals were generally well-received by investors, largely because they resolve long-running sores for the mining giants and will likely result in a return of the proceeds to shareholders.

BHP Chief Executive Andrew Mackenzie has said the proceeds of the sale of the U.S. shale assets will be returned to shareholders, but hasn’t yet given details of how and when.

Rio Tinto has been cautious over the announced agreement to sell its Indonesian unit to the state-owned miner PT Inalum, which would effectively mean selling its 40 percent interest in Grasberg, which is operated by Freeport-McMoRan Inc. However, the chances are good that at least some of the proceeds, should the deal be finalised, will wind up in the hands of shareholders.

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