Rio Tinto Limited (ASX:RIO) announced that it has signed an agreement to sell its 40 per cent stake in the Bengalla coal Joint Venture in Australia to New Hope Corporation Limited (ASX:NHC) for US$606 million.
The Bengalla project is situated in the Hunter Valley, NSW and is the smallest of three coal mines in the area in which Rio have a stake. The mine produced 8.6 million tonnes in 2014, of which Rio’s share was 3.4 tonnes or 40 percent.
Rio has now announced completed US$4.5 billion of divestments since January 2013, with the agreed sale of its interest in the Bengalla Joint Venture.
Rio Tinto Copper & Coal Chief Executive, Jean- Sebastien Jacques commented, “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.
“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.
“Bengalla mine is a robust, well-managed business with a productive workforce and we believe it will have a positive future under the new owner with different capital allocation priorities. We expect the business to make a significant and ongoing contribution to the New South Wales economy. Rio Tinto will ensure high safety and environmental standards are maintained through the transition of the new owners.”
Rio Tinto and Mitsubishi Development have recently agreed a simplification to the ownership structure of Coal & Allied which helps enable this transaction. Under the agreement, Rio Tinto will assume 100 per cent ownership of Coal & Allied. Mitsubishi Development will move from holding a 20 per cent stake in Coal & Allied to holding a direct 32.4 per cent stake in the Hunter Valley Operations mine.
Author: Ben Visser
Sep 30, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.