Rio Tinto sells Mt Pleasant coal mine site

Wednesday, 27 Jan 2016 12:28:54 | Stephen Letts

The state-owned Fandi Hotel bulit in the 1990s on the site of architect I.M. Pei's childhood home has been renovated to a life style complex.

Mining giant Rio Tinto has continued to scale down its Australian coal interests with the sale of its Mount Pleasant mine to Indonesian interests.

Rio Tinto said it had reached a binding agreement to sell the Hunter Valley thermal coal asset to MACH Energy Australia for $US224 million ($320 million) plus a share of future royalties.

However, the royalty payments only kick-in once the coal price exceeds $US72.50 per tonne, well above the current level of around $US43 per tonne.

MACH is owned by Indonesia's largest conglomerate, the Salim Group, which has interests in food processing, palm oil, logging and recreation, as well as resources.

Rio has now offloaded $US830 million ($1.2 billion) worth of coal assets in recent months following the sale of its interest in the neighbouring Bengalla coal joint-venture late last year.

Mount Pleasant was one of Rio's largest undeveloped coal assets with total marketable reserves of 474 million tonnes.

The sale follows continued weakness in coal prices despite numerous mine closures and millions of tonnes of production being removed from the market.

A recent survey by global energy analysts Wood Mackenzie found that around a third of Australian coal mines would be losing money at current prices.

Rio Tinto Copper & Coal chief executive Jean-Sebastien Jacques said the recent asset sales delivered significant value for shareholders.

"We believe Mount Pleasant can have a very positive future under its new owners with different priorities for development and capital allocation," Mr Jacques said.

Rio Tinto's senior management has repeatedly said it is open to more asset sales and would consider any deal that that offered more than the company's internal valuation.

The company has announced a total of $US4.7 billion ($6.7 billion) of asset sales since early 2013.

Rio Tinto will continue to focus its coal production in the Hunter Valley at its Mount Thorley open-cut mine which employs around 1,300 workers.

AustraliaPlus

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Rio Tinto sells Mt Pleasant coal mine site

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