Whitehaven Coal has secured a deal to buy Rio Tinto’s 75 per cent interest in the Winchester South coal project in Queensland’s Bowen Basin for $US200 million ($260 million).
It is the second Bowen Basin coal deal Rio Tinto has announced this week, following the $US1.7 billion agreement it executed with Glencore to sell its interests in the Hail Creek mine and Valeria project.
Winchester South is a large, undeveloped coal project about 30km from Moranbah. The Winchester South tenement contains 356 million tonnes (Mt) of coal resources and is expected to produce both coking and thermal coal products once developed.
According to Whitehaven, a developed Winchester South will potentially have a mine life of 20–30 years with annual production of between 7.5–15Mt/y.
Rio Tinto chief executive Jean-Sébastien Jacques commented: “We believe this agreement for the sale of Winchester South represents the best option for the future development of the project while delivering attractive value for Rio Tinto as we continue to streamline our portfolio.”
The agreement will involve Whitehaven paying Rio $US150 million on the completion date of the deal and then making another $US50 million payment 12 months later.
For Whitehaven, the acquisition would provide it with a development asset close to infrastructure, including one of the main rail lines in the Goonyella System and a nearby electricity power grid.
Whitehaven managing director and CEO Paul Flynn described the Winchester South project as a significant strategic acquisition that offered an opportunity to develop and operate a high-quality, large-scale coking coal mine in one of the world’s premier coking coal basins.
“Winchester South will form a key part of the company’s longer term growth plan and complements our Vickery project in the Gunnedah Basin as another high quality asset which will help Whitehaven respond to the strong and growing demand for premium coking coal that exists in Asian markets,” Flynn said.
“Whitehaven generates the greatest value for shareholders where the company can deploy its full breadth of skills across approvals, construction and operations and the Winchester South project aligns perfectly with these strengths.”
The remaining 25 per cent of the project is owned by the Spectre Group. The deal is subject to the usual regulatory approvals and conditions, but is expected to be completed by the second half of 2018.