Rio Tinto has signed a $2.25bn agreement with a consortium to divest its entire 80% interest in the Kestrel underground coal mine in Queensland, Australia, thereby completing the company’s exit from coal mining business.
The consortium includes private equity manager EMR Capital (EMR) and PT Adaro Energy.
The proposed sale marks Rio Tinto’s exit from the coal sector and follows two other recently signed divestment deals in the coal business.
Rio Tinto chief executive Jean-Sébastien Jacques said: “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.”
Rio Tinto previously reached an agreement on 22 March to offload its entire 75% interest in the Winchester South coal development project in Queensland to Whitehaven Coal for a consideration of $200m.
Prior to that, a deal was signed with Glencore regarding the sale of the company’s entire interests in the Hail Creek coal mine and the Valeria coal development project in Queensland for $1.7bn.
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The completion of the transaction is subject to the receipt of all regulatory approvals and other conditions.
It is currently scheduled to occur in the second half of this year.
The company will receive a total of $4.15bn in proceeds from the recent divestments of Rio Tinto’s Queensland coal assets as a result of the initiative.
Rio Tinto expects to use the proceeds for general corporate purposes.
The Kestrel mine is located in the Bowen Basin and primarily produces coking and thermal coal products for export markets.
The mine produced 5.1 million tonnes of saleable coal last year.