PRESS: Rio Tinto's Last Australian Coal Assets Attract Interest

LONDON (Alliance News) - Coal assets in Australia put up for sale by Rio Tinto PLC are said to ...

Alliance News 12 October, 2017 | 2:37PM
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LONDON (Alliance News) - Coal assets in Australia put up for sale by Rio Tinto PLC are said to have attracted attention from a group of investors as the mining giant looks to complete its exit from Australian coal production, sources familiar with the matter have told Reuters on Thursday.

Rio Tinto said it planned to sell its Kestrel and Hail Creek coking coal mines located in the Bowen Basin in Queensland as part of it planned exit from its Australian coal business in order to focus on iron ore, copper and aluminium.

Interested parties in the assets have been invited to submit tentative offers by December 8. The sale was being run by Credit Suisse Group AG.

Reuters reported that two sources had told them that a consortium comprised of Apollo Global Management LLC, Canada Pension Plan, Xcoal Energy & Resources LLC and a former Glencore PLC executive have joined together to bid for the assets.

The source also told Reuters that rival bids could potentially emerge from Anglo American PLC, which had also expressed an interest in the mines. Deteriorating outlook for metallurgical coal, however, is said to have possibly deterred it from making a bid.

One of the sources also indicated that Whitehaven Coal Ltd may also put in an offer.

In September Rio Tinto completed its USD2.69 billion sale of Coal & Allied Industries Ltd, which had thermal coal business in the Hunter Valley region of New South Wales, to Yancoal Australia Ltd. In 2016 Rio Tinto also sold Mount Pleasant thermal coal assets for USD221 million to MACH Energy Australia Pty Ltd.

After these sales, Rio Tinto Coal Australia only operated the Kestrel and Hail Creek mines. Sources suggested to Reuters that these assets could themselves attract bids around USD2.0 billion.

In September Rio Tinto said that coal reserves at Kestrel were 50% higher than that reported in its 2016 annual report, adding 62.0 million tonnes to the total. After the adjustment, reserves stood at 185 million tonnes.

Shares in Rio Tinto were 0.6% higher at 3589.00 pence on Thursday, 14% higher year to date.

By Ahren Lester;

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Glencore PLC 308.78 GBX 1.24
Anglo American PLC 1,563.87 GBX 1.95
Rio Tinto PLC 3,724.50 GBX 0.50
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