(Australian Associated Press)
Rio Tinto has struck a $865 million deal to sell its 40 per cent stake in the Bengalla open cut coal mine in NSW to New Hope Corporation.
Bengalla is the smallest of three coal mines in NSW’s Hunter Valley in which Rio holds an interest, and produced 8.6 million tonnes of thermal coal in 2014. It can be expanded up to 12 million tonnes a year.
“This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets,” Rio’s chief executive for copper and coal Jean-Sébastien Jacques said on Wednesday.
Rio has been looking to sell its less profitable assets to focus on iron ore and copper amid a slump in commodities prices and tapering demand from China.
The company said it has now announced or completed divestments worth $US4.5 billion ($A6.44 billion) since January 2013.
Rio’s Hunter Valley operations consist of three main mining areas – Bengalla, Hunter Valley Operations and Mount Thorley Warkworth, which together produced around 34 million tonnes of thermal coal.
The assets had reportedly drawn interest from commodities giant Glencore and private equity firm X2 Resources, among others.
Rio holds the Bengalla mine stake in a joint venture with Wesfarmers, Japan’s Mitsui and Taipower.
New Hope said it expects to complete the acquisition in the first quarter of 2016, if none of the other three partners exercise their pre-emptive rights under the joint venture agreement.
“This offer demonstrates New Hope’s positive long-term outlook for the global export thermal coal market driven by increasing demand across Asia,” New Hope managing director Shane Stephan said.
Rio’s shares closed $2.08 higher at $48.60 while New Hope rose 11.5 cents to $1.765.