Rio Tinto closes sale of Clermont coal mine to Glencore

1 June 2014 (Last Updated June 1st, 2014 18:30)

Glencore Xstrata and Sumitomo-owned GS Coal have completed the acquisition of a 50.1% stake in Clermont coal mine joint venture from Rio Tinto for $1.015bn.

Glencore Xstrata and Sumitomo-owned GS Coal have completed the acquisition of a 50.1% stake in Clermont coal mine joint venture from Rio Tinto for $1.015bn.

The sale agreement was signed in October 2013 and has been awaiting certain regulatory approvals. Glencore has now taken over management of the thermal coal mine in central Queensland, Australia.

Clermont mine opened in 2010 and currently produces around 12 million tonnes of coal annually and is expected to ramp-up its production to 165 million tonnes in the next 16 years.

"As well as being Australia's third-largest thermal-coal mine, Clermont is structurally low-cost."

A Glencore spokesperson was quoted by Mining Australia as saying that the decision to purchase Clermont reflected the company's focus on developing high-quality assets that complement existing operations and market capabilities.

"It is a producer of high-energy thermal coal, with minimal capital requirements," spokesperson said.

Back in October 2013, Glencore Xstrata coal assets head Peter Freyberg said the company expects to earn an attractive financial return from the purchase.

"As well as being Australia's third-largest thermal-coal mine, Clermont is structurally low-cost," Freyberg said.

Rio Tinto said that the sale of the mine will strengthen its balance sheet and add to shareholder value.

Last week, Glencore announced job cuts in its Queensland mines, as thermal coal prices dropped to a four-year low to $74.33 per tonne.

The company is eliminating 40 jobs at its Tahmoor underground coal mine in Illawarra, and announced its decision to close Newlands underground mine in 2015.