Finance Finance News Rio Tinto to sell Mozambique coal assets for $50m

Rio Tinto to sell Mozambique coal assets for $50m

Rio Tinto
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Mining giant Rio Tinto will sell its troubled Mozambique coal assets for $US50 million, almost three years after its controversial $4 billion acquisition of Riversdale Mining.

Rio said it had agreed to sell Rio Tinto Coal Mozambique, which comprises the Benga coal mine and other projects in the Tete province of Mozambique, to International Coal Ventures Private Limited.

The world’s second largest iron ore miner acquired the projects as part of the $4 billion Riversdale Mining acquisition in 2011.

The sale requires regulatory approvals and is expected to close in the third quarter of 2014.

Rio said it will continue to manage the Benga mine to the highest safety and environmental standards during the transition.

The company’s other assets in Mozambique will be unaffected by the transaction.

In February last year Rio posted a $US2.99 billion ($A2.91 billion) full year net loss due to $US14.4 billion ($A14 billion) of writedowns on its aluminium assets and a coal project in Mozambique.

The loss led to chief executive Tom Albanese’s departure.

Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets in his previous role as Energy chief executive, also stepped down in early 2013.

At the time the development of infrastructure to support the coal assets in Mozambique had been more challenging than Rio Tinto originally anticipated, due to local approvals for barge transport on the Zambezi River.

Mr Albanese’s replacement Sam Walsh has previously said he would aggressively pursue asset sales after unveiling plans to cut costs by more than $US5 billion ($A4.86 billion) by the end of 2014.

Rio Tinto shares closed 32 cents higher at $66.07 at 1740 AEST on Wednesday.