Rio Tinto has announced it will sell its stake in the Clermont coal mine for a little over $US1billion to Glencore Xstrata and Japan’s Sumitomo Corp.
Glencore and Sumitomo will each acquire half of Rio’s 50.1 per cent stake in the Central Queensland mine, with Glencore to take over management. The transaction is expected to close in the first quarter of 2014.
The sale is the latest cost-cutting measure by Rio in the company’s efforts to reduce a $19 billion debt and preserve their single-A credit rating.
Despite the sale brought on by financial woes, Rio Tinto chief financial officer Chris Lynch, said the company had no plans to divest any more of their Queensland operations, at least in the short term.
“Rio Tinto remains committed to a long-term future in Central Queensland. Production has recently commenced from the US$2 billion extension of the Kestrel Mine and studies are currently underway to extend production from the Hail Creek Mine. We expect Clermont Mine will continue to perform strongly under its new ownership and make an ongoing contribution as a member of the local community. We will maintain high safety and environmental standards at Clermont Mine, through the transition period to the new manager.”
Speaking to the Business Spectator, Peter Freyberg, head of Glencore’s coal assets, said he had high hopes for the mine’s future earning capacity.
“As well as being Australia’s third-largest thermal-coal mine, Clermont is structurally low-cost,” Freyberg said.
With the agreed sale of Clermont Mine, Rio Tinto has now announced or completed US$2.915 billion of divestments this year. This includes a binding agreement for the sale of its interest in Northparkes and the recently completed sales of Palabora and Eagle.
The sale is subject to agreement with Rio Tinto’s joint venture partners, Mitsubishi Development Pty Ltd, J-Power Australia Pty Ltd and J.C.D. Australia Pty Ltd on certain matters under the Clermont Joint Venture Agreement such as pre-emption rights.
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