Rio Tinto sells Australian coal mine stake

Buying Rio’s 40 percent share of the Bengalla coal venture and the planned expansion of its New Acland mine means “we would be using a considerable amount of our firepower”, Managing Director Shane Stephan said in a phone interview Wednesday.

Upon completion of the transaction, as a 100% owner of Coal & Allied, Rio Tinto will hold a 67.6% interest with management rights in the Hunter Valley mine.

Rio has been eyeing a coal exit, and this deal signals it is in train.

Ms Woods has questioned the company’s decision to invest in the mine at a time when there’s greater focus on renewable energies. Resources-to-supermarkets conglomerate Wesfarmers-which owns a stake in the Bengalla mine-has previously said it is interested in more coal deals, despite the downturn in commodity prices. Australia’s Newcastle coal, an Asian benchmark, has tumbled to less than $60 a metric ton since surging above $136 a ton in early 2011. “It demonstrates our commitment to further strengthening our balance sheet, maintaining a disciplined approach to allocating capital across the Group and delivering strong returns for shareholders through the cycle”.

It follows a recent agreement between Rio Tinto and Mitsubishi Development to simplify the ownership structure of Coal & Allied.

Located in the Hunter Valley of New South Wales, Australia, Bengalla coal mine produced 8.6 million tonnes in 2014.

Mitsubishi declined to comment on whether it plans to sell the stakes it now has in the Hunter Valley Operations and Warkworth mines, but a spokesman said it sees energy coal demand growing in the medium to long term.

Rio Tinto PLC’s offer of a 40% stake in an Australian coal mine denote the most recent reshaping of the worldwide coal industry, as large mining companies pare back their presentation to a commodity that has been irritated by slack request and prices at multiyear lows.

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