Rio sells coal mines across Australia

Rio Tinto has put several of its coal assets up for sale including its stakes in Clermont, Blair Athol, and Coal & Allied.

The mining giant has hired Deutsche Bank to handle the sales, as the company moves to cut costs and boost shareholder returns.

The Australian reported that Rio is looking to sell its interest’s in the Clermont and Blair Athol thermal coal mines in Queensland for around $1bn.

While in NSW, it may cut 80 per cent of its stake in Coal & Allied, to 51 per cent.

Rio Tinto and Japan's Mitsubishi Corp bought out minority investors in Coal & Allied in late 2011 for $3.13 billion.

However, with the valuation of coal companies slumping since then, the continuing weakness of coal prices and cost pressures, analysts predict Rio will struggle to fetch over $3 billion for all three assets.

"Anything more than $3 billion for the Coal & Allied stake, Clermont and Blair Athol would be a good result," Hayden Bairstow, a Sydney-based resources analyst at CLSA, told The Wall Street Journal.

 "Australian thermal coal is becoming non-core to Rio and BHP as it becomes more marginal."

Sam Walsh, who took over as Rio’s chief in January, is said to be moving quickly in a bid to improve returns for investors. The company flagged they will improve shareholder value by selling weak assets.

Walsh set a cost cutting target of $5 billion to be reached by the end of 2014; he also aims to reduce capital expenditure on both approved and sustaining projects to approximately $13 billion in 2013.

Also making Walsh’s hit list is decreasing exploration activities and minimising evaluation spending to the tune of $750 million (pre-tax) in 2013 compared with 2012.

Prompting the cost-cutting measures was the company’s first ever full year loss of almost $3 billion.

The price of thermal coal has fallen from $US115 a tonne last year to around $US90 a tonne.

Other coal assets up for sale in Australia include BMA’s Gregory Crinum mine and Peabody’s Wilkie Creek.


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