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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for RIO
FinSentS Euro 600
29 May 15 15:26:19
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/zAqMYGhNFK #STOXX600
FinSentS UK100
29 May 15 15:17:46
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/TO7rCbWtl5 #LDN100
janet gale
29 May 15 09:17:02
$RIO - Rio Tinto PLC Transaction in Own Shares http://t.co/LyERHy3mbp
Dakota Financial
29 May 15 08:39:27
Rio Tinto plc Rating Reiterated by Societe Generale $RIO http://t.co/S1cyVNAcXb
Breaking News Now
29 May 15 08:37:09
$RIO: Notable Session Mover: Rio Tinto Plc (NYSE:RIO): http://t.co/PZAo0THJUv
Gord Bolton
29 May 15 08:00:54
@GordBolton $ETG.TO $RIO has acquired an interest in this junior. http://t.co/PURIWHo2t2 http://t.co/DTwL4vrmDA
FinSentS Euro 600
29 May 15 07:23:22
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/TZlguSmu5N #STOXX600
FinSentS UK100
29 May 15 07:16:23
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/mrB7thQhdZ #LDN100
Forex  News Insider.
29 May 15 07:04:58
Mongolia to issue $1B in bonds to help ease cash shortfall http://t.co/J19EMzGy7n $RIO $TRQ
Eduardo Berumen IV
29 May 15 05:41:43
$RIO Mongolia to issue $1B in bonds to help ease cash shortfall http://t.co/y3uUbdLjWD http://t.co/2rLpwtotTC
BreakingStocksNews
29 May 15 05:32:50
$RIO $TRQ: Mongolia to issue $1B in bonds to help ease cash shortfall: http://t.co/ywJT0DHIg8
SA Breaking News
29 May 15 05:29:32
Mongolia to issue $1B in bonds to help ease cash shortfall http://t.co/feEtod1dIQ #premarket $RIO $TRQ
jeffery
29 May 15 03:20:43
RT @jdierkes: ICYMI: My 1st reactions to $TRQ announcement of $RIO commitment to #OyuTolgoi Phase II http://t.co/lsNsNFjHZD #ОюуТолгой #MGL…
leahanne
29 May 15 02:49:18
XIV VelocityShares Daily Inverse VIX Short Term ETN Shares http://t.co/OKavVITFik $XIV $CCJ $RIO $RIGH #XIV #investing #invest
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29 May 15 02:44:35
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ProTradersNews
29 May 15 01:33:02
$RIO: Rio Tinto Plc Price Target Update: http://t.co/13Fv0xLDPg
Dakota Financial
29 May 15 00:42:51
Rio Tinto plc Given New GBX 2,500 Price Target at Liberum Capital $RIO http://t.co/8zc23LVle5
The Legacy News
29 May 15 00:27:33
Rio Tinto plc Earns Sector Perform Rating from RBC Capital $RIO http://t.co/yE2J9SE6zp
Dakota Financial
29 May 15 00:09:14
Rio Tinto plc Earns “Outperform” Rating from Sanford C. Bernstein $RIO http://t.co/eiI2w4eOai
Sleek Money
28 May 15 23:35:42
Rio Tinto plc PT Lowered to GBX 2,500 at Liberum Capital $RIO http://t.co/MKSjYAAich
Ticker Report
28 May 15 23:32:54
Rio Tinto plc PT Lowered to GBX 2,500 at Liberum Capital $RIO http://t.co/rF8mGxmwGz
US Consumer News
28 May 15 23:23:46
Rio Tinto plc's PT cut by Liberum Capital to GBX 2,500. sell rating. http://t.co/YpVqYSxIwG $RIO #RIO
FinSentS Euro 600
28 May 15 23:20:20
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/H7cj71hWBQ #STOXX600
Analyst Ratings
28 May 15 23:18:31
Rio Tinto plc's PT cut by Liberum Capital to GBX 2,500. sell rating. http://t.co/oR2R0jJt44 $RIO #RIO
FinSentS UK100
28 May 15 23:15:07
$RIO:LN Fortescue tie-up with steel group #RIO TINTO GROUP (GBP) http://t.co/JJDKfN67CL #LDN100
Dakota Financial
28 May 15 23:09:23
Rio Tinto plc’s Buy Rating Reiterated at Deutsche Bank $RIO http://t.co/Svjj2ybEqJ
Dakota Financial
28 May 15 22:25:06
Rio Tinto plc Stock Rating Reaffirmed by Societe Generale $RIO http://t.co/MN5gLYaMNc
Г.Өнөрбаяр
28 May 15 21:36:50
RT @BloombergTVM: .@TurquoiseHillRe-ийн хувьцааны ханш эргэн буурлаа $TRQ #OT $RIO - @Xasherdene_D >>> http://t.co/n5eO6p3izp http://t.co/6…
Dale Choi, MSc.
28 May 15 21:36:05
RT @BloombergTVM: .@TurquoiseHillRe-ийн хувьцааны ханш эргэн буурлаа $TRQ #OT $RIO - @Xasherdene_D >>> http://t.co/n5eO6p3izp http://t.co/6…
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Owen Raszkiewicz
28 May 15 21:18:33
RT @TheMotleyFoolAu: On 11x earnings with a 4.9% dividend yield is Rio Tinto cheap or a major value trap? $RIO #ausbiz http://t.co/RYZBz8xe…
The Motley Fool Aust
28 May 15 20:51:25
On 11x earnings with a 4.9% dividend yield is Rio Tinto cheap or a major value trap? $RIO #ausbiz http://t.co/RYZBz8xe7w
US Banking News
28 May 15 19:47:50
Rio Tinto plc Receives Buy Rating from Societe Generale $RIO http://t.co/VniKfcWXzj
Chimguundari
28 May 15 19:01:23
RT @CoverMongolia: $RIO Pact Primes #Mongolia for $1 Billion Government Bond Sale | @michaelkohnSF for @Business​, May 29 http://t.co/52rKM…
А. Дэлгэрсайхан
28 May 15 18:50:10
RT @CoverMongolia: $RIO Pact Primes #Mongolia for $1 Billion Government Bond Sale | @michaelkohnSF for @Business​, May 29 http://t.co/52rKM…
Cover Mongolia
28 May 15 18:48:46
$RIO Pact Primes #Mongolia for $1 Billion Government Bond Sale | @michaelkohnSF for @Business​, May 29 http://t.co/52rKMjWnk5
FinSentS UK100
28 May 15 15:16:13
$RIO:LN China's revenge serves body blows to BHP and Rio #RIO TINTO GROUP (GBP) http://t.co/SrVNhS0BZB #LDN100
john kimelman
28 May 15 15:11:11
Bullish on Mining Stocks, Bearish on #Oil ? http://t.co/sWhzu8Ahmn via @barronsonline $BHP $RIO $AAUKY $USO
Oliver Gross
28 May 15 14:43:40
Weltgrößte #Minen-Konzerne erhöhen ihre Wetten auf #Kupfer #mining $bhp $rio $fcx $tck $glen $fm #copper #outlook http://t.co/Dd2D3wp5ag
brian cox
28 May 15 14:32:40
RT @FinancialReview: There's an #ironore equation that makes $FMG attractive to #China. http://t.co/XUdgRG8vJB #ausbiz $BHP $RIO http://t.c…
Margie
28 May 15 14:16:34
RT @FinancialReview: There's an #ironore equation that makes $FMG attractive to #China. http://t.co/XUdgRG8vJB #ausbiz $BHP $RIO http://t.c…
Financial Review
28 May 15 14:13:08
There's an #ironore equation that makes $FMG attractive to #China. http://t.co/XUdgRG8vJB #ausbiz $BHP $RIO http://t.co/So8wcm01Ly
StockNewsWires
28 May 15 13:32:02
$RIO: Bullish on Mining Stocks, Bearish on Oil?: http://t.co/y9VBnN5jcM
John Laughlin
28 May 15 12:33:34
@CDMCapital Wishful thinking Mr Li, surely $BHP $RIO $VALE can figure out how to restrain themselves. And, I wouldn't trust a thing $GS says
Jason Olive
28 May 15 12:00:01
RT @SeekingAlpha: China Is Hunting For Uranium Assets http://t.co/3Qaeh2A1AS $CCJ $RIO $URA
Víctor
28 May 15 11:54:10
RT @SeekingAlpha: China Is Hunting For Uranium Assets http://t.co/3Qaeh2A1AS $CCJ $RIO $URA
Seeking Alpha
28 May 15 11:49:03
China Is Hunting For Uranium Assets http://t.co/3Qaeh2A1AS $CCJ $RIO $URA
Analyst Ratings
28 May 15 10:44:12
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28 May 15 10:42:28
Rio $RIO Showing Bearish Technicals With Resistance At $44.88 ( http://t.co/QdQ3HIR7z1 )
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28 May 15 10:38:27
Rio Tinto plc Rating Reiterated by Societe Generale $RIO http://t.co/vKwHRxX1uO
				
				
By  +Follow October 2, 2013 10:23AM
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