Rio Tinto to sell stake in Australian coal mine to New Hope

Miner Rio Tinto PLC said that it has reached a binding agreement for the sale of its 40% interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation Ltd for USD606 million.

“This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets in the mining industry”, said Jean-Sébastien Jacques, chief executive of Rio Tinto’s copper and coal division.

The buyer, New Hope, said the large-scale open-cut mine in New South Wales’ Hunter Valley region has a 25-year life with about 218m tonnes of marketable coal reserrves.

Managing director Shane Stephan said the Bengalla mine’s costs were very competitive.

New Hope has offered to also take over the running of Bengalla from Rio Tinto by acquiring CNA Bengalla Proprietary Limited, the mine’s operating company.

Under the change, Rio Tinto will wholly own Coal & Allied, and Mitsubishi Development’s 20% stake in Coal & Allied will become a 32.4% stake in the Hunter Valley Operations mine.

Rio Tinto and Mitsubishi Development have recently agreed a simplification to the ownership structure of Coal & Allied which helps enable this transaction.

The company said it has now announced or completed divestments worth $US4.5 billion ($A6.44 billion) since January 2013.

Upon completion of the deals, Rio Tinto will have 67.6% interest in the Hunter Valley Operations with management rights; 80% with management rights in Mount Thorley, 55.6% in Warkworth operations with management rights as well as 100% stake in the Mount Pleasant project.

Rio, advised by Deutsche Bank, earlier this year put all its coal stakes in the Australian state of New South Wales up for sale.