SYDNEY, Australia (AP) -- Mining giant Rio Tinto said Friday it has struck a deal to sell an iron ore mine and other projects in South America to rival Vale for $1.6 billion.
The deal comes as the Anglo-Australian miner scrambles to reduce its heavy debt burden.
Rio Tinto said in a statement it had signed definitive agreements to sell its Corumba iron ore mine in Brazil along with related river logistics operations in Paraguay, and the undeveloped Potasio Rio Colorado project in Argentina, to Companhia Vale do Rio Doce SA, Brazil's largest miner.
Rio Tinto said no approvals are required for the sale of the potash assets, though the Corumba sale would require approvals.
The announcement from Rio is the latest in a string of spending cuts and layoffs that have been announced by the world's major mining companies as demand for metals is crumpled by the global economic downturn.
Rio Tinto has launched plans to slash spending and shed 14,000 jobs worldwide to reduce its $40 billion in debts, which are mostly from to its purchase of aluminum producer Alcan.
"This is a very positive step towards meeting our commitment to reduce debt by 10 billion in 2009," Rio Tinto chief financial officer Guy Elliott said.