Rio Tinto seeks to divest stake in Australian coal assets
The mining giant has hired Deutsche Bank to handle the sale of Clermont and Blair Athol thermal coal mines in the state of Queensland, which is expected to generate more than $1bn, reported The Wall Street Journal.
Rio Tinto is also planning to offload a stake of up to 29% in its Coal & Allied Industries unit in the state of New South Wales.
The company holds an 80% interest in Coal & Allied Industries, which operates several mines in the state.
Analysts earlier estimated that the company will need to divest or close some of its operations in order to reach its target of cutting costs by over $5bn by the end of 2014.
Rio Tinto's new CEO Sam Walsh made a commitment to increase value for shareholders and announced that cash would be raised from divestures this year.
The Clermont mine, which opened in 2010, is being offered as one package with the Blair Athol mine to the buyer.
Rio Tinto, which owns a 50.1% stake in the mine, laid off workers when thermal coal prices dropped in September 2012.
The company stopped operations at Blair Athol mine, which produced approximately 250 million metric tonnes of thermal coal, in November 2012, citing a reduction in commodity prices, increasing mining costs and a high Australian dollar.
Operations at this mine were also halted due to depletion of coal seams, which impacted the quality of coal production.
Rio Tinto is the latest firm seeking to divest its stake in mining assets in Australia.
BHP Billiton recently identified its ten non-core operations, including Queensland's Gregory Crinum coking coal mine, to be put up for sale in order to cut costs.
Global miner Xstrata also announced its plans to merge its New South Wales and Queensland divisions under a single entity, Xstrata Coal Australia, citing industry's tough economic conditions.
Image: Rio Tinto stopped operations at Blair Athol mine in November 2012 due to low coal prices and increasing costs. Photo: Rio Tinto.