Published on March 29th, 2018 | by James Ayre0
Rio Tinto Sells Last Coal Mine, Has Now Completely Exited Coal
March 29th, 2018 by James Ayre
The sale of Rio Tinto’s 80% stake in the Kestrel coal mine (Queensland) is still subject to regulatory approval, but is pretty much a given at this point and expected to be completed by the second half of the year.
The move means that Rio Tinto has now completely exited the Australian coal industry and has effectively exited the entire coal industry. Notably, the recent sale occurred at a higher price than many industry analysts had expected, according to Reuters.
The deal represents the firm’s third coal asset sale in just the last month, with the sales collectively bringing in around $4.15 billion. Those funds will reportedly be used for “general corporate purposes.”
Reuters provides more: “Chief Executive Jean-Sebastien Jacques said in a statement the latest sale, combined with Glencore’s purchase of the Hail Creek mine and the divestment of undeveloped coal projects would make Rio’s portfolio stronger and more focused. RBC said in a report the sale would make Rio Tinto the only mining major without coal assets, which should boost its allure to some investors. … The Kestrel mine in the Bowen Basin region, which produces high quality coking coal, will be jointly managed and operated by Australia-based EMR and Adaro and marks EMR’s biggest mining investment. It last year bought an 80% stake in Zambian copper mine Lubambe for $97.10 million. It will also be Adaro’s biggest overseas investment.”
The reason for the acquisition by the firms in question is that coking coal will remain in strong demand for decades to come due to steel production led by China-based firms (especially in South Asia) — if the execs of the two entities in question are to be believed.
Photo by Bernard S. Jansen • CC BY-SA 3.0