Glencore buys up Hail Creek coal mine
RIO TINTO has sold off its 82 per cent stake in Hail Creek coal mine as well as coal resources in central Queensland to mining giant Glencore for $2.2billion.
The deal to buy the mine, which is an hour and 40 minutes drive west of Mackay, was confirmed about 7pm Tuesday, to suit both the Australian and American stock markets.
Glencore, which is heavily invested in thermal coal in the Bowen Basin, will pay Rio Tinto US$1.7billion (AUS$2.2billion) for the mine near Glenden.
The sale includes Rio Tinto's 82.0 per cent interest in the Hail Creek operating mine and its 71.2 per cent interest in the Valeria project.
Glencore, as it moves more into coking coal, has also made an offer for the remaining 18 per cent of Hail Creek owned by Nippon Steel, Marubeni Coal and Sumisho Coal Developments for $441million.
Rio Tinto chief executive J-S Jacques said, "The sale of Hail Creek and Valeria delivers compelling value for our shareholders and continues our strategy of strengthening our portfolio, focusing on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities.
"We expect that Hail Creek will continue to perform strongly under its new owner, securing long-term jobs and continuing its contribution to the State of Queensland."
The transaction is subject to conditions including approval from the Foreign Investment and Review Board, the Queensland Government and foreign competition authorities.
However, the handover is expected in the second half of 2018.
There is a separate process underway to sell Rio Tinto's remaining Australian coal assets.
The Hail Creek mine in 2017 produced about 9.4 million tonnes of coal for export from the Dalrymple Bay Coal Terminal.
As of December 31, Hail Creek had Joint Ore Reserves Committee resources of 794 million tonnes with proven and probable reserves of 142 million tonnes.