Rio Tinto sells Bengalla thermal coal mine

OREANDA-NEWS. October 01, 2015. Australian coal producer New Hope has agreed to buy UK-Australian mining firm Rio Tinto's 40pc stake in the Bengalla thermal coal mine for \\$606mn.

Bengalla produced 8.25mn t of thermal coal in the 2014-15 fiscal year to 30 June and is part of Rio Tinto's Hunter valley coal operations, which also include the Hunter Valley Operations (HVO) and Mount Thorley Warkworth mines. Rio Tinto has signalled for more than two years that it wants to reduce its exposure to thermal coal and opened a data room for the sale earlier this year.

Switzerland-based trading and mining firm Glencore had been seen as the frontrunner to acquire the assets because of the synergies available with its own Hunter valley coal mining operations. Former Glencore executive Mick Davis is also keen on the Rio Tinto assets for his X2 resources firm, as is Indonesian conglomerate Salim Group and private equity firm KKR. HVO and Mount Thorley Warkworth, which produced a combined 4.8mn t of semi-soft coking coal and 21mn t of thermal coal in 2014, are still up for sale.

Rio Tinto will rework its Coal & Allied joint venture as part of the sale process. Japanese firm Mitsubishi Development will swap its 20pc interest in Coal & Allied, which is the vehicle through which Rio Tinto owns its stake in Bengalla, for a direct 32.4pc stake in HVO.

The deal is subject to none of the joint-venture partners in Bengalla using their pre-emptive sale rights. Bengalla is operated by Rio Tinto, with Australian conglomerate Wesfarmers owing 40pc, and Taiwanese state-controlled utility Taipower and Japanese trading house Mitsui each owning 10pc.