Rio Tinto has agreed to sell its coal assets in Mozambique to Indian state-owned consortium International Coal Ventures (ICVL) for $50m.
The sale includes Rio Tinto Coal Mozambique's Benga mine, Zambeze project and Tete East project located in the Tete province.
The Zambeze and Tete East projects are 100%-owned by Rio Tinto, while the company has a 65% interest in the Benga mine.
Rio Tinto acquired the three mines in 2011 for $3.7bn through the purchase of Riversdale Mining.
The company has been reducing costs to bring down the huge debt generated from the purchase of the mines.
In the first half of the year, Rio Tinto's Mozambique unit has produced 246,000t of hard coking coal that is used in steelmaking, and 230,000t of thermal coal used to generate electricity.
Benga mine was brought to production after 2011 and produces prime hard coking coal and thermal coal.
ICVL plans to boost its production capacity from five million tonnes (Mt) to 12Mt a year.
The deal, which is subject to regulatory approvals and other conditions, is expected to close in the third quarter of the year.
ICVL was created by the Indian Government as a joint venture company for acquiring metallurgical coal and thermal coal assets outside the country.
The coal assets will cater to the needs of state-owned Steel Authority of India, Coal India, Rashtriya Ispat Nigam and National Minerals Development Corporation, who are the stakeholders in ICVL.
In addition to Rio Tinto, mining company Vale is also reportedly planning to sell its Moatize coal mine in Mozambique.
Image: The acquisition of Rio Tinto's Mozambique mines will allow ICVL to expand coking coal supplies in India. Photo: courtesy of Rio Tinto.