Rio Tinto finds thermal coal the hardest sell
Rio Tinto is struggling to sell its coal assets in Australia with lowball offers from three bidders for its Clermont mine stalling the process.
The Wall Street Journal reports India’s Adani Enterprises, Dutch trading house Trafigura and Australian coal mining company New Hope Corporation separately made offers of less than $800 million for Clermont, below Rio’s expectations and putting the sale on hold.
Rio is in the midst of a $5 billion cost cutting program costs and is seeking to off-load coal stakes in Australia and Mozambique and an iron ore operation in Canada.
Clermont in central Queensland is one of Rio’s largest thermal coal mines and only started operations in 2010 to supply up to 177 million tonnes over its expected 17-year lifetime.
Rio Tinto Coal Australia manages the operation on behalf of the joint venture partners: Rio Tinto (50.1%) Mitsubishi Development (31.4%) and Australian power utilities holding the remainder.
But despite Clermont’s attractiveness, thermal coal is proving a hard sell.
The price of coal used in power-generation has slumped to levels below $80 a tonne for the first time since October 2009 and is down from around $100 at the start of the year.
Image courtesy of Rio Tinto Coal Australia