Rio looks at offloading coal assets

Eighteen months after taking full control of NSW coalminer Coal & Allied, Rio Tinto is reportedly soon to finalise the sale of a large minority stake – along with holdings in some of its Queensland coalmines – as it seeks to cut its level of debt.

The sale comes while Rio is looking to offload its Canadian iron ore assets and its Ashton diamond mine in the Kimberley region of Western Australia as it cuts capital spending after the elevation of former iron ore division boss Sam Walsh to chief executive.

His promotion followed heavy provisions taken against a poorly thought-out acquisition of coal assets in Mozambique and after its disastrous acquisition of Alcan, the Canadian-based aluminium group.

Rio refused to comment on speculation on Tuesday of the looming deadline for bids for a 29 per cent stake in Coal & Allied, which operates a suite of coalmines in the Hunter Valley, along with its Clermont and Blair Athol mines in Queensland.

The Hunter Valley mines produce about 12 million tonnes of coal annually, with Clermont producing a further 4 million tonnes. These mines comprise only a portion of Rio’s share of an estimated 30 million tonnes of coal produced at its mines in Australia.

China’s state-owned Shenhua and India’s Aditya Birla Group are among companies considering bidding for the coal assets, which have an estimated value of $3.2 billion, as is Coal India, another state-owned entity.

Shenhua is already developing a coal mine in the Hunter Valley.

The potential sale comes amid weak steaming coal prices globally, with little sustained improvement expected, thanks to the prospect of rising US exports amid the surge in oil and gas reserves in north America because of the shale revolution.

Rio has a 50.1 per cent stake in Clermont, with trading house Mitsubishi Corp holding a 31.4 per cent stake.

Mitsubishi also has a 20 per cent stake in Coal & Allied.

The original release of this article first appeared on the website of Hangzhou Night Net.

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