Rio to finalise asset sales

Rio Tinto is reportedly moving closer towards offloading a number of its coal assets in Queensland and New South Wales, with thinner margins and lower coal prices driving the play. 

The mining giant will soon finalise the sale of a number of its coal assets including 29 per cent of Rio’s 80 per cent stake in Coal & Allied, and the company’s majority stake in Clermont and Blair Athol mines, SMH reports.

Amongst the companies considering a bid for the mining giant’s coal assets is China’s state-owned Shenhua Group and India's Aditya Birla Group.

Analysts estimate the sale could fetch almost $3.2 billion for Rio.

Offloading underperforming assets is one part of newly appointed Rio chief executive Sam Walsh’s stringent cost cutting agenda which will help cut the company’s $26 billion in debt and protect its single-A credit rating.

Australia’s coal sector has been marred by tough times, hit by rising costs and a 30 per cent drop in prices since early 2012.

Investment firm Mitsubishi Corp currently holds a 20 per cent share of Coal & Allied and is also a co-owner in the Clermont mine, holding 31.4 per cent stake.

Late last year Rio valued its total Australian coal assets to be worth $5.63 billion.

But the valuation is likely to be downgraded as a result of the NSW Land and Environment Court’s decision to overturned permission for the company to expand its Warkworth coal project in the Hunter Valley.

It is estimated Rio’s Australian coal mines produce a total of 30 million tonnes of coal a year, with its Hunter Valley operations producing about 12 million tonnes and Clermont 4 million tonnes annually.

Also reportedly up for sale is the company’s majority stake in the Northparkes copper and gold mine, located in Central West New South Wales.

Rio Tinto last year said Northparkes was valued at US$405 million and expect there to be enough resources to continue mining for at least another decade.

Northparkes is a jointly owned operation between Japan based Sumitomo who holds a 20 per cent stake and Rio with the majority 80 per cent share

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