Finance Finance News Rio Tinto completes exit from Australian coal

Rio Tinto completes exit from Australian coal

Rio Tinto
The mining giant said it has agreed to sell 80 per cent stake in Queensland's Kestrel underground mine. Photo: Getty
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Rio Tinto has completed its exit from Australian coal with the $2.25 billion sale of its 80 per cent stake in Queensland’s Kestrel underground mine.

The mining giant on Wednesday said it has agreed to sell its stake to private equity manager EMR Capital and Indonesian coal firm Adaro.

The sale is expected to be completed in the second half of 2018 and takes the value of Rio Tinto’s Australian coal divestments in the past month to $4.15 billion.

Rio Tinto last month said it was selling two Queensland coal projects to global mining giant Glencore for $1.7 billion, and its stake in an undeveloped project to Whitehaven Coal for $200 million.

Rio Tinto chief executive Jean-Sebastien Jacques said the funds raised would be used for “general corporate purposes”, but did not give further details.

“The sale of Kestrel, together with the announced divestments of Hail Creek and our undeveloped coal projects, delivers exceptional value to our shareholders and will leave our portfolio stronger and more focused on delivering the highest returns through targeted allocation of capital,” Mr Jacques said.

“I would like to thank the many people at Rio Tinto and the communities where we operate, whose hard work and commitment has contributed to the success of the coal business over many years.”

RBC Capital Markets analyst Tyler Broda said the total amount raised by Rio Tinto was “pretty admirable” and said the firm now had scope for buybacks or other cash returns to shareholders.

He said becoming the only major without coal assets was a positive and would help attract environmentally aware investors.

“The company has managed to reach a very flexible position,” Mr Broda said.

“This could become even more important through a downturn should it be able to time a pivot back into asset purchases at the optimum time.”

-AAP