Rio Tinto has completed the sale of its wholly owned subsidiary Coal & Allied Industries to Yancoal Australia, in a deal worth $2.69bn.

The acquisition allows Yancoal to take control of Rio Tinto’s thermal coal business in the Hunter Valley region of New South Wales.

The total deal comprises $2.45bn paid upon completion, with a further $240m of unconditional guaranteed royalty payments.

Under the sale agreement, Yancoal could offer an additional royalty based on coal price, which is capped at $410m.

Proceeds from the sale will be used to meet Rio Tinto’s general corporate needs.

“The total deal comprises $2.45bn paid upon completion, with a further $240m of unconditional guaranteed royalty payments.”

Completion of the deal comes after series of competing bids from Yancoal and Glencore to acquire Coal & Allied Industries.

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Rio Tinto opted for Yancoal due to a greater certainty in the transaction and other factors such as improved chances of gaining regulatory approval.

Through the acquisition, Yancoal will assume all assets and liabilities of Coal & Allied and its subsidiaries.

The acquisition comprises a 67.6% interest in the Hunter Valley Operations mine and an 80% interest in the Mount Thorley mine.

In addition, Yancoal will have access to Coal & Allied group’s 55.6% interest in the Warkworth mine, a 36.5% interest in Port Waratah Coal Services and other undeveloped coal assets.

Last month, Glencore acquired interests in the assets acquired by Yancoal from Rio Tinto.