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Rio Tinto Close to Selling Blair Athol Coal Mine in Australia

By  +Follow October 2, 2013 10:23AM
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Diversified global miner Rio Tinto PLC (RIO) has been looking for ways to divest some less-profitable assets in 2013 as a means to cut into debt that mushroomed to nearly $19 billion in 2012.  Namely, Rio has been trying to sell an iron ore mine in Canada and its interest in coal mines in Australia and Mozambique as prices for coking, or metallurgical, coal have plunged in the past year and a half.

The plan to sell assets was put in motion by Sam Walsh after he assumed the role of chief executive in January as a means to improve profits by focusing on its bigger mines and return value to shareholders.  Walsh’s scheme involves the company cutting costs by $5 billion by the end of 2014.

In July, Rio sold its majority stake in the Northparkes copper mine in Australia to China Molybdenum Co. Ltd. for $820 million.

When prices for coking coal, which is heavily used in steel manufacturing, were soaring in 2011 to hit $330 per metric ton in the second quarter, demand was high in Europe and China.  Since then, coking coal prices have been more than halved on growth concerns, cutting into producers’ profits.

In April, The Australian reported that Rio was looking to sell its 50.1-percent stake in the Clermont coal mine for $1 billion and also looking to sell its neighboring Blair Athol coal mine in Queensland.  Rio was also reported to be looking to slash its 80-percent interest in Coal & Allied Industries Limited by 29 percent.  In November 2011, Rio and Japan’s Mitsubishi Development Pty Ltd. bought the 10.2-percent stake in Coal & Allied that they didn’t already own for $3.13 billion.

Finding buyers at the asking price has been a challenge for Rio, even though coal prices are trying to eke upward.  Japanese steelmaker Nippon Steel Y Sumitomo Metal Corp. recently set its fourth quarter contract price for prime hard grade coking coals with Australian miners at $152 per metric ton, up by $7 from the third quarter.  Conversely, some analysts argue that abundance in supply will drive prices lower going forward.

The Wall Street Journal reported three days ago that Rio has fielded a few offers to buy its majority stake in the Clermont mine from three bidders, India’s Adani Enterprises, Australia’s New Hope Corporation and Dutch trading house Trafigura, but the highest offer has been $850 million, well short of the $1-billion asking price.

Today WSJ says that Rio is close to selling the Blair Athol coal mine to Brisbane, Australia-based, diversified energy company Linc Energy, according to a source close to the matter.  Financial terms of the deal were not disclosed.  Shares of Linc, which trade on the Australian exchange under the ticker “LNC” fell about 10 percent in Wednesday trading.

Shares of Rio Tinto are trading marginally ahead Wednesday at $46.67, up 15 cents in early action.  Shares have far underperformed the main indices in 2013, down by about 12 percent since the start of January, but investors will be looking for final news of a deal as it represents another solid step in some restructuring that could improve future share value.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for RIO
FinSentS UK100
31 Oct 14 16:18:49
$RIO:LN Petrel protection plan part of project #RIO TINTO GROUP (GBP) http://t.co/DWNEStg0P7 #LDN100
WKRB News
31 Oct 14 11:03:46
Deutsche Bank Reiterates “Buy” Rating for Rio Tinto plc $RIO http://t.co/HBKThDT8wB
StockSpotter
31 Oct 14 10:23:55
$RIO up 1.4% to 48.01 possible bullish reversal? #stocks #options #trading http://t.co/dcRbOumjZr
Anthony Allyn
31 Oct 14 10:11:39
$RIO support is also broken but flat for the week. http://t.co/Zd4Rlig46B
Briefing.com
31 Oct 14 10:05:04
$RIO: BMO Capital Markets ups to Outperform
FinSentS UK100
31 Oct 14 08:17:51
$RIO:LN Petrel protection plan part of project #RIO TINTO GROUP (GBP) http://t.co/XL8Rjj3k9M #LDN100
Gordon McLaren
31 Oct 14 06:37:36
RT @MasterMetals: #Mongolia eager for #OyuTolgoi deal by year-end - @Mineweb $RIO #MasterMetals http://t.co/NyeVvuPlq8
DailyStockPicks
31 Oct 14 06:17:56
Partner Jet $PJT.V is up 183% this week after Q3 release with more gains coming. Find out why: http://t.co/MEpEjkCm4H $RIO $NFLX $FDIS
Mineweb
31 Oct 14 06:10:28
RT @MasterMetals: #Mongolia eager for #OyuTolgoi deal by year-end - @Mineweb $RIO #MasterMetals http://t.co/NyeVvuPlq8
INVERTIR EN BOLSA
31 Oct 14 05:52:28
$GLD $SLV $NUGT $ABX $AUY $BVN $RIO $VALE $BHP $FCX $NEM - gold falls below $ 1,200 an ounce, time to buy? http://t.co/kQHwkurbxj
MasterMetals
31 Oct 14 05:50:33
#Mongolia eager for #OyuTolgoi deal by year-end - @Mineweb $RIO #MasterMetals http://t.co/NyeVvuPlq8
Media Sentiment
31 Oct 14 05:35:59
$RIO received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 169
Market Int Center
31 Oct 14 05:34:37
Rio $RIO Showing Bearish Technicals With Resistance At $48.14 ( http://t.co/NzjaiO7lz7 )
RGN Online
31 Oct 14 05:32:39
#Mongolian prime minister Altankhuyag Norov orders the resolution of the Rio Tinto $RIO #OyuTolgoi expansion dispute http://t.co/MAvz7M6k2L
FonsieTrader
31 Oct 14 05:09:30
Bearish MACD Crossovers 2/3 $KOOL $MIK $MLNX $MSM $MYE $NANO $NG $NGD $NYRT $ORC $PRAN $PRGX $RIO $RNA http://t.co/3R2SxjokK7
Sleek Money
31 Oct 14 04:24:16
Rio Tinto plc Given accumulate Rating at Charles Stanley $RIO http://t.co/tczBaRKFpK
Andrew D Turner  adt
31 Oct 14 03:46:29
#Aus #Equities $RIO Looks set to SURGE to $2.5B Mongolia #Copper Write-down #TheAustralian
WKRB News
31 Oct 14 02:38:14
Rio Tinto Limited’s Outperform Rating Reiterated at RBC Capital $RIO http://t.co/LyuY0Uv9ax
InterCooler
31 Oct 14 02:37:21
Deutsche Bank Reaffirms Buy Rating for Rio Tinto plc $RIO http://t.co/or6ODHhhJQ
WKRB News
31 Oct 14 02:22:53
Rio Tinto Limited’s Buy Rating Reiterated at Deutsche Bank $RIO http://t.co/LO4rQ5x3Ie
FinSentS UK100
31 Oct 14 00:16:41
$RIO:LN Petrel protection plan part of project #RIO TINTO GROUP (GBP) http://t.co/0hU1l0O1Gx #LDN100
Media Sentiment
30 Oct 14 22:19:18
$RIO received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 737
Analyst Ratings
30 Oct 14 22:18:40
Rio Tinto Limited's outperform rating reiterated at RBC Capital. http://t.co/9rCimHXOMJ $RIO #RIO
Klondike Strike
30 Oct 14 22:10:48
RT @SHMining: Palabora Copper awarded Level 4 BBBEE status http://t.co/HA9LP04xXv #mining #copper $RIO $AAL.L via @MiningWeekly http://t.c…
US Consumer News
30 Oct 14 22:09:31
Rio Tinto Limited's outperform rating reiterated at RBC Capital. http://t.co/qSWShFvtpy $RIO #RIO
PDAC
30 Oct 14 22:03:00
RT @SHMining: Palabora Copper awarded Level 4 BBBEE status http://t.co/HA9LP04xXv #mining #copper $RIO $AAL.L via @MiningWeekly http://t.c…
SH Mining
30 Oct 14 22:00:12
Palabora Copper awarded Level 4 BBBEE status http://t.co/HA9LP04xXv #mining #copper $RIO $AAL.L via @MiningWeekly http://t.co/O7EXpLVQnf
Klondike Strike
30 Oct 14 21:06:37
RT @Cape_Lambert: $RIO, Hitachi to finalize Austr mining partnership to streamline iron ore mining in Pilbara http://t.co/ydRErux8tt #Ausbi…
Cape Lambert
30 Oct 14 21:05:07
$RIO, Hitachi to finalize Austr mining partnership to streamline iron ore mining in Pilbara http://t.co/ydRErux8tt #Ausbiz #Pilbara #mining
Alpha Maven
30 Oct 14 14:45:19
RT @chrispycrunch: 4 Reasons Cliffs Natural Resources $CLF Bottomed This Time $BHP $RIO $VALE - http://t.co/Tp8axdkefH
WKRB News
30 Oct 14 14:45:00
Rio Tinto plc Sets New 1-Year Low at $46.82 $RIO http://t.co/dgFP6FHb4u
Ticker Report
30 Oct 14 13:29:51
Rio Tinto plc Receives Buy Rating from Deutsche Bank $RIO http://t.co/Vb59ZHiAbj
Blueshift Research
30 Oct 14 13:08:20
Despite lower prices, #iron ore majors will benefit from reduction in competition including $BHP, $RIO, and $VALE according to our sources
Market Int Center
30 Oct 14 12:29:21
Potential Rio $RIO Trade Has 4.27% Downside Protection ( http://t.co/Bq4PJHBv59 )
janet gale
30 Oct 14 10:27:12
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/YtCKBph2kX
FONTESRJ
30 Oct 14 10:27:07
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/52JbT3Ije3
AFONSOALONSO
30 Oct 14 10:27:03
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/JCpGpwLVMC
Cleber Silva
30 Oct 14 10:27:00
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/RByzmNhY7d
Agencia Infinito
30 Oct 14 10:26:56
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/Frw7DoX2Rz
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30 Oct 14 10:26:54
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/xv0Fu3P07M
Andre
30 Oct 14 10:26:46
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/ZLFtIsmfZ2
RAFAEL MONTESANTI
30 Oct 14 10:26:44
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/XlJPmdxdgD
Gabriel Badaró Pinto
30 Oct 14 10:26:37
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/f000qZNIfj
diogenesmarcondes
30 Oct 14 10:26:34
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/8sCQXQcBtd
JOAO CESAR ANÁPOLIS
30 Oct 14 10:26:30
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/rfwC0mvbta
airton vacaro
30 Oct 14 10:26:27
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/wR56Epwd8j
Marcio Castro
30 Oct 14 10:26:25
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/8gw9bovtZz
NASDAQ
30 Oct 14 10:26:20
$RIO - LONDON MARKETS: FTSE 100 Ends Higher After Roller-coaster Day http://t.co/eRpPFzgn9j
George J Lloyd
30 Oct 14 08:15:30
RT @chrispycrunch: 4 Reasons Cliffs Natural Resources $CLF Bottomed This Time $BHP $RIO $VALE - http://t.co/Tp8axdkefH
WKRB News
30 Oct 14 07:59:46
Rio Tinto plc Earns Buy Rating from Deutsche Bank $RIO http://t.co/gT1vdUizrh
				
				
By  +Follow October 2, 2013 10:23AM
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