Rio Tinto completes sale of Australian coal asset
Despite the fact that top coal producers are receiving the highest profits in six years from their coal mines, Rio Tinto (ASX, LON, NYSE: RIO) continues to work towards accomplishing its mission of completely divesting from its coal assets.
In a media brief, the world’s No.2 miner announced that it had completed the sale of its 75 percent interest in the Winchester South coal development project in Queensland, Australia, to Whitehaven Coal Limited (WHC.AX).
As soon as the sale was completed, Rio received $150 million in cash and is set to get an unconditional cash payment of $50 million due in 12 months. The deal was originally made public back in March.
Winchester South is a large undeveloped coal project located in the northern Bowen Basin, approximately 30km south-east of the Moranbah township. The tenement contains 356 million tonnes of coal mineral resources and, once developed, is expected to produce coking coal and thermal coal products.
In the same press release, the Anglo-Australian company said that during the second half of 2018 it will focus on completing the sale of its interests in the Kestrel and Hail Creek coal mines, and the Valeria coal development project, all located in Queensland.
Hail Creek, which is a large scale open cut mining operation, made a pre-tax profit of $357 million in 2017. Valeria, on the other hand, is a large undeveloped project that contains 762 million tonnes of coal mineral resources. These two assets would be acquired by Glencore (LON:GLEN).
Rio’s move regarding its coal investments comes after 18 per cent of its shareholders voted in favour of a resolution that effectively called on the company to do more to address climate change.
It is also part of the company’s debt reduction programme, which led to a bond purchase and redemption plan for up to $3.5 billion.
The mining giant also said that it decided to exit coal to focus on iron ore, copper, and aluminum.