Rio Tinto’s Walsh hits the gas pedal, puts Aussie coal assets up for sale

Rio Tinto's (ASX, LON, NYSE:RIO) new CEO, Sam Walsh, is swiftly going ahead with his plans for getting rid of non-core operations to curb costs and bolster the company’s balance sheet by putting the "for sale" sign out on portions of its Australian coal operations

The transaction, considered the second biggest coal deal by the firm in Australia, could see up to 29% of Rio’s Coal & Allied unit going to a new player and it is expected to fetch around $3 billion, several reports said Wednesday.

The giant miner wants to reduce its interest in the coal unit, which owns active mines in eastern Australia's New South Wales state, to as low as 51% and has hired Deutsche Bank to handle the deal.

The bank is already selling Rio Tinto's interests in the Clermont and Blair Athol thermal coal mines in neighbouring Queensland state, which could fetch more than $1 billion.

The company is also working with investment banks Credit Suisse and CIBC to lead the sale of most of it shares in Iron Ore Company of Canada (IOC).

Walsh, former head of the miner’s iron ore division, replaced Tom Albanese in January, after the company wrote down the value of its aluminum and Mozambique coal assets. The move led to $14.4 billion in writedowns and left the firm in the red.

In February the miner announced it had appointed former chief financial officer at BHP Billiton, Christopher Lynch, as its new finance director, a move that was seen by analysts as a desperate effort to balance the company’s finances.

Rio is not the only miner rethinking its coal business in Australia. Last month Swiss miner Xstrata became the latest coal producer to announce cost cuts and said it was looking to consolidate its NSW and Queensland divisions, as well as closing its Brisbane office.

Brazilian giant Vale (NYSE:VALE) has also appointed a partner, Bank of America Merrill Lynch, to sell minority stakes in two of its Australian coal projects, the Belvedere and Eagle Downs deposits.

(Image: Marine Corps reservist Bob "Captain Kangaroo" Keeshan, 1942, via One.Big.Photo)