Rio Tinto waves goodbye to Coal & Allied

Rio Tinto has completed the $2.69 billion sale of its thermal coal business Coal & Allied in the New South Wales Hunter Valley to Yancoal Australia.

Chinese controlled Yancoal will take over management of the coal business from today.

The $2.69 billion sale includes $2.45 billion in cash paid today and another $240 million of unconditional guaranteed royalty payments.

As a result of the sale, Rio’s guidance for thermal coal production in 2017 has been reduced from 17-18 million tonnes to 13-14 million tonnes.

Yancoal chairman Xiyong Li said, “Today is a significant achievement for Yancoal Australia and redefines our business as a leader within the Australian resources sector and a major competitor throughout international coal markets.”

Yancoal CEO Reinhold Schmidt said, “The completion of the strategic acquisition of Coal & Allied is a credit to the Yancoal team and will provide new opportunities for continued growth.

“We look forward to maximising significant operational synergies from the combination of Coal & Allied’s world-class assets with our existing portfolio.”

Glencore secured an agreement with Yancoal to acquire a 49 per cent interest in the Hunter Valley Operations (HVO) coal mine and form a joint venture once the sale was complete. Under the agreement, Glencore will acquire 16.6 per cent of HVO from Yancoal, with both companies working together to purchase Mitsubishi’s 32.4 per cent interest in the operation to reach the 49 per cent stake.

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