Rio Tinto has agreed to sell its 40% stake in the Bengalla thermal coal mine in Eastern Australia to New Hope Group for $606 million.
New Hope Group is one of Australia’s biggest specialist coal miners.
Rio Tinto has said that it wants to offload its less profitable businesses in order to focus more on iron ore and copper mining.
Bengalla is the smallest of three coal mines in the Hunter Valley in which Rio Tinto is a stakeholder.
“This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets in the mining industry. It demonstrates our commitment to further strengthening our balance sheet, maintaining a disciplined approach to allocation capital across the Group and delivering strong returns for shareholders through the cycle,” said Rio Tinto Copper and Coal Chief Executive Jean Sebastien Jacques in an ASX Announcement.
“Bengalla mine is a robust, well-managed business with a productive workforce and we believe it will have a positive future under the new owner with different capital allocation priorities. We expect the business to make a significant and ongoing contribution to the New South Wales economy. Rio Tinto will ensure high safety and environmental standards are maintained through the transition to the new owners.”
Rio also announced that it had reached an agreement with Japan’s Mitsubishi Corp to disband a coal joint venture in the Hunter Valley.
Under the agreement, Rio Tinto will assume 100% ownership of Coal & Allied, while Mitsubishi Development will move from holding a 20% stake in Coal & Allied to holding a direct 32.4% stake in the Hunter Valley Operations mine.
The sale of the interest in the Bengalla Joint Venture is expected to close in the first quarter of 2016.