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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
US Consumer News
24 Oct 14 22:33:45
Rio Tinto Limited's buy rating reiterated at Citigroup Inc.. $71.00 PT. http://t.co/3y3QmftJqc $RIO #RIO
Analyst Ratings
24 Oct 14 22:20:49
Rio Tinto Limited's buy rating reiterated at Citigroup Inc.. $71.00 PT. http://t.co/a2g3ODKy0T $RIO #RIO
Stock Relay
24 Oct 14 16:02:08
wininstocks2014: Stock Charts: RIO 49.04 Stock Charts $RIO Rio Tinto PLC ADS http://t.co/Ln5YxcSvMi
wininstocks2014
24 Oct 14 15:34:50
RIO 49.04 Stock Charts $RIO Rio Tinto PLC ADS (NYSE) Last Updated: 10/24/2014 17:34:52 RIO Stock Chart - 1 Mon http://t.co/F5qwrGqhYb
US Banking News
24 Oct 14 14:19:45
Rio Tinto plc Stock Rating Reaffirmed by Canaccord Genuity $RIO http://t.co/DCW1rgomow
Sleek Money
24 Oct 14 13:37:50
Canaccord Genuity Reiterates “Buy” Rating for Rio Tinto plc $RIO http://t.co/Fq2Ox6FnUt
Analyst Ratings
24 Oct 14 13:20:20
Rio Tinto plc (ADR)'s buy rating reiterated at Canaccord Genuity. http://t.co/FCYItoc5Hv $RIO #RIO
US Consumer News
24 Oct 14 13:19:43
Rio Tinto plc (ADR)'s buy rating reiterated at Canaccord Genuity. http://t.co/do2m8ZBTvg $RIO #RIO
WKRB News
24 Oct 14 02:55:05
Rio Tinto Limited Rating Reiterated by RBC Capital $RIO http://t.co/30z7vsNIc3
Sleek Money
24 Oct 14 02:38:23
Canaccord Genuity Reiterates “Buy” Rating for Rio Tinto plc $RIO http://t.co/s7vKG4IaTs
US Banking News
24 Oct 14 02:35:26
Rio Tinto plc’s “Buy” Rating Reiterated at Canaccord Genuity $RIO http://t.co/alJP5hbmTB
US Consumer News
24 Oct 14 02:11:06
Rio Tinto plc's buy rating reiterated at Canaccord Genuity. GBX 4,080 PT. http://t.co/vO70vQpgoX $RIO #RIO
GLOBAL NEWS DEPOT
24 Oct 14 02:08:57
RT @RatingsNetwork: Rio Tinto plc's buy rating reiterated at Canaccord Genuity. GBX 4,080 PT. http://t.co/RBwjx8Qkpl $RIO #RIO
Analyst Ratings
24 Oct 14 02:06:45
Rio Tinto plc's buy rating reiterated at Canaccord Genuity. GBX 4,080 PT. http://t.co/RBwjx8Qkpl $RIO #RIO
HotKeyTrading
24 Oct 14 01:30:03
Downgraded: $BDBD $YELP $DDD $ANGI $ADHD $GLF $KO $CIE $MJN $PNC $CFN $AMD $URBN $RIO $NFLX http://t.co/XQITF0lRKD #daytrader #mkt #stock
rob
24 Oct 14 00:33:30
$RIO it's all up to the chart :)) risk still 49 :/but i like the target better, and the crowd will join >72ish LOL http://t.co/9visUgF1i1
WDT44
23 Oct 14 19:34:31
RT @micenter: Rio $RIO Showing Bearish Technicals With Support At $48.90 ( http://t.co/Q2PX4z7DmE )
US Banking News
23 Oct 14 19:10:09
Rio Tinto Limited Earns “Outperform” Rating from RBC Capital $RIO http://t.co/7MOx93uepz
Lisa Cantu
23 Oct 14 18:20:21
RT @Metalbanker: “Sam made no secret of the fact he would like to continue well beyond next year." $RIO @RhiannonHoyle http://t.co/L3ssjJau…
Metalbanker
23 Oct 14 18:16:10
“Sam made no secret of the fact he would like to continue well beyond next year." $RIO @RhiannonHoyle http://t.co/L3ssjJau7M
A Macdonald-Smith
23 Oct 14 17:19:08
Sam Walsh given rolling contract with Rio Tinto $RIO #mining http://t.co/1Ob5bQUrVP
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23 Oct 14 15:35:12
RT @FeLimited: Sam Walsh given open-ended contract at $RIO: could stymie Glencore t'over http://t.co/2RugKCvi1V $GLEN #ironore #steel
Karen  Toms
23 Oct 14 14:05:11
RT @FinancialReview: "The demerger proposal is an important step forward," @BHPBilliton chief tells London AGM. #ausbiz $BHP $RIO http://t.…
Fe Limited
23 Oct 14 13:55:12
Sam Walsh given open-ended contract at $RIO: could stymie Glencore t'over http://t.co/Bl1UFJg1Lc $GLEN #ironore #steel #metals #mining
Financial Review
23 Oct 14 13:36:35
"The demerger proposal is an important step forward," @BHPBilliton chief tells London AGM. #ausbiz $BHP $RIO http://t.co/KhvQXrq44f
Media Sentiment
23 Oct 14 10:24:57
$RIO received a new alert. Find out why at http://t.co/nZwqRf3BRT #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 539
Market Int Center
23 Oct 14 10:21:04
Rio $RIO Showing Bearish Technicals With Support At $48.90 ( http://t.co/Q2PX4z7DmE )
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23 Oct 14 10:20:06
Le FTSE 100 a gagné 0,3%, mais Tesco chuté de 6,6% http://t.co/1FxKyKlcD3 $UNA $MRW $GSK $BLT $RIO $BARC $SCHI $TSCO
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23 Oct 14 10:13:39
Tickers trending on TWTR in last 1 hour $RIO $UNP $LUV $PG $TSCO http://t.co/8Rbp1RqCwL
TP Strategic Partner
23 Oct 14 10:03:35
Added to $RIO
Dividend Master
23 Oct 14 09:57:12
iron ore now $79+ in China today ... insane bulls can't get $VALE $RIO $CLF $BHP green with that sticking in their face
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23 Oct 14 09:40:40
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FONTESRJ
23 Oct 14 09:40:36
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/GecFcKkyHL
AFONSOALONSO
23 Oct 14 09:40:32
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/sRBol51lm3
Cleber Silva
23 Oct 14 09:40:29
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/faefx2AaGL
Agencia Infinito
23 Oct 14 09:40:25
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/i75AwyThGd
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23 Oct 14 09:40:23
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/DMgOIvx1CS
JOSÉ BRITO
23 Oct 14 09:40:20
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/o858j8MZE2
Andre
23 Oct 14 09:40:13
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/8HXNb5C6VX
RAFAEL MONTESANTI
23 Oct 14 09:40:10
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/kldXOiJRfR
Gabriel Badaró Pinto
23 Oct 14 09:40:02
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/m0BabnqHH2
diogenesmarcondes
23 Oct 14 09:39:59
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/xcQSR0chwC
JOAO CESAR ANÁPOLIS
23 Oct 14 09:39:55
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/hgzeq5O2pk
airton vacaro
23 Oct 14 09:39:52
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/0qXCy2IbKg
Marcio Castro
23 Oct 14 09:39:50
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/4maSTepc9k
janet gale
23 Oct 14 09:39:41
$RIO - LONDON MARKETS: FTSE Rides European Optimism, But Tesco Slumps http://t.co/QBR3prvDGm
4-traders.com
23 Oct 14 09:15:03
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InterCooler
23 Oct 14 06:48:26
Rio Tinto plc’s “Outperform” Rating Reiterated at RBC Capital $RIO http://t.co/CBIhPZD8AX
TP Strategic Partner
23 Oct 14 06:42:16
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David Dierking
23 Oct 14 06:12:47
Commented on: "Cliffs Natural Resources: A Dividend Cut Is Imminent" http://t.co/xhf8WpljOm $CLF $RIO $VALE
				
				
By  +Follow October 2, 2013 10:23AM
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