Latest cut-price sale of an Australian asset in the troubled coal sector
Sydney – Rio Tinto is selling its interest in an Australian coal mine for A$1 (US$0.75) — the latest transaction in the troubled coal sector agreed for less than the price of a cup of coffee.
The Anglo-Australian miner said on Monday it was in discussions with Terracom, an Australia-listed junior miner, over its joint venture interest in the mothballed Blair Athol thermal coal mine in Queensland.
The proposed sale follows Rio’s decision to relinquish its stake in a Papua New Guinea copper mine last week, as part of a strategy of shedding non-core assets being pursued by Jean-Sébastien Jacques, Rio’s new chief executive.
“Coal is not material to the earnings for many big miners and they can cop a bit of [public relations] flak for retaining coal assets,” said Mathew Hodge, analyst at Morningstar. “There is also an environmental liability attached to owning coal mines.”
Shares in Rio rose 3.7 per cent in Australia on Monday in a broader market that was up 0.7 per cent.
Thermal coal prices have fallen from a peak of about US$180 per tonne in 2008 to just over US$50 due to a supply glut caused by overproduction and a drop in Chinese demand. According to some commodities analysts, the thermal coal export market is in structural decline because of regulatory efforts to tackle global warming.
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