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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
jeffery
27 Mar 15 03:05:12
RT @CoverMongolia: $Rio CEO to visit troubled #Mongolia copper mine this weekend - sources | @TerrTogii for @Reuters​, March 26 $TRQ http:/…
Steven Larkins
27 Mar 15 02:20:38
RT @LaurenceLavelle: @CoverMongolia @TerrTogii @ncousyn @Reuters @RioTinto RIO management must read this Reuters article. $RIO
jeffery
27 Mar 15 01:06:02
RT @LaurenceLavelle: @CoverMongolia @TerrTogii @ncousyn @Reuters @RioTinto RIO management must read this Reuters article. $RIO
John Durstig
27 Mar 15 00:21:48
RT @Cape_Lambert: Fortescue's Twiggy Forrest says $RIO, $BHP face #ironore 'prisoner's dilemma' http://t.co/aO1myCZs9a #IO #mining #ausbiz …
FinSentS UK100
27 Mar 15 00:17:44
$RIO:LN Fortescue Metals Group: worthless or worth holding on to? #RIO TINTO GROUP (GBP) http://t.co/FsJYNpvtm9 #LDN100
Cape Lambert
26 Mar 15 23:55:13
Rio Tinto boss Walsh says Twiggy’s iron ore production cap is ‘nonsense’ http://t.co/Avo6P3VEym $FMG $RIO #trade #ausbiz #Chinabiz
Nick Cousyn
26 Mar 15 23:27:16
RT @LaurenceLavelle: @CoverMongolia @TerrTogii @ncousyn @Reuters @RioTinto RIO management must read this Reuters article. $RIO
WKRB News
26 Mar 15 23:23:20
Rio Tinto plc Stock Rating Reaffirmed by Citigroup Inc. $RIO http://t.co/B98A7rG4eq
Laurence Lavelle
26 Mar 15 23:09:57
@CoverMongolia @TerrTogii @ncousyn @Reuters @RioTinto RIO management must read this Reuters article. $RIO
Cover Mongolia
26 Mar 15 22:33:41
$Rio CEO to visit troubled #Mongolia copper mine this weekend - sources | @TerrTogii for @Reuters​, March 26 $TRQ http://t.co/OyCncFYpyU
Cape Lambert
26 Mar 15 21:05:09
Fortescue's Twiggy Forrest says $RIO, $BHP face #ironore 'prisoner's dilemma' http://t.co/aO1myCZs9a #IO #mining #ausbiz #Pilbara #China
4-traders.com
26 Mar 15 20:43:05
#About 75 percent of China iron ore mining capacity loss-making - industry http://t.co/oGEsZhK1cV $RIO
Dexter Bland
26 Mar 15 19:34:34
@CalibreInvest but $BHP, $RIO still green, that is hard to explain. EOM/EOQ shenanigans?
Dexter Bland
26 Mar 15 16:47:24
@angelamacd @FinancialReview $RIO very much a "buy at highs, sell at lows" sort of company. Just look at their capital management.
A Macdonald-Smith
26 Mar 15 16:40:56
Rio Tinto to cut M&A jobs as deals appetite wanes in commodities rout #mining $RIO http://t.co/P3eIt2JVu6 via @FinancialReview
FinSentS UK100
26 Mar 15 16:20:12
$RIO:LN Twiggy stands by cartel comment #RIO TINTO GROUP (GBP) http://t.co/O6kQ1Sosnf #LDN100
Sentiquant
26 Mar 15 14:59:56
#sentishiftdown $BIDU $SPY $USO $AXP $EXAS $RIO $SCMP $NFLX $SNDK $NXPI #sentiquant 20150326 18:00:03:169
OMAR  STOCKTRADER
26 Mar 15 14:23:59
Rio Tinto CEO rejects call for industry to cap iron ore output $RIO $BHP $VALE $FSUMF #NYSE http://t.co/S93K9Ej3B8
Opal Moon
26 Mar 15 13:42:44
RT @FinancialReview: How @AusConservation got @RioTinto so wrong. #ausbiz #auspol $RIO http://t.co/g8sr1JK7rW http://t.co/4J6IzGVl1E
Financial Review
26 Mar 15 13:41:57
How @AusConservation got @RioTinto so wrong. #ausbiz #auspol $RIO http://t.co/g8sr1JK7rW http://t.co/4J6IzGVl1E
US Banking News
26 Mar 15 13:37:39
Rio Tinto plc Rating Reiterated by Barclays $RIO http://t.co/pFX8MlycYe
Ticker Report
26 Mar 15 13:26:18
Rio Tinto plc Rating Reiterated by Barclays $RIO http://t.co/hLMkmInZTe
US Consumer News
26 Mar 15 13:16:24
Rio Tinto plc's overweight rating reiterated at Barclays. http://t.co/5ISbWaVvwE $RIO #RIO
Analyst Ratings
26 Mar 15 13:16:18
Rio Tinto plc's overweight rating reiterated at Barclays. http://t.co/RYPgsu3N42 $RIO #RIO
Sentiquant
26 Mar 15 12:59:58
#sentishiftdown $BIDU $EXAS $SPY $USO $ATHX $RIO $SCMP $NFLX $ZNGA $SNDK #sentiquant 20150326 16:00:04:900
Rebecca Jones
26 Mar 15 12:46:12
$Rio Tinto’s Walsh says rival's call for iron ore cartel is "absolute nonsense" http://t.co/uVv8acwXph via @business #ausbiz #ironore
Quantpost Basic Mats
26 Mar 15 12:34:26
$VALE News: "Rio Tinto CEO rejects call for industry to cap iron ore output $RIO …" http://t.co/ZSahG4un54 Quote: https://t.co/enZKB8ZEfl
SA Breaking News
26 Mar 15 12:34:26
Rio Tinto CEO rejects call for industry to cap iron ore output http://t.co/CiTYld2PDK $RIO $BHP $VALE $FSUMF
Sentiquant
26 Mar 15 11:59:58
#sentishiftdown $BIDU $NFLX $SPY $ZNGA $USO $ATHX $EXAS $RIO $SCMP $GOOG #sentiquant 20150326 15:00:04:909
Sentiquant
26 Mar 15 10:59:58
#sentishiftdown $BIDU $ZNGA $NFLX $SPY $ATHX $USO $GOOG $EXAS $RIO $SCMP #sentiquant 20150326 14:00:04:668
janet gale
26 Mar 15 10:47:03
$RIO - Rio Tinto PLC Transaction in Own Shares http://t.co/LOrt9Ehp70
The Daily Lede
26 Mar 15 09:05:49
Rio Tinto cutting 1500 UK jobs; cuts are larger than expected and include HQ positions http://t.co/kHhfSh5odk #London $RIO
Sentiquant
26 Mar 15 08:59:58
#sentishiftdown $BIDU $DAL $SGYP $ATHX $RIO $ISIS $EXAS $AMBA $NKE $SPY #sentiquant 20150326 12:00:04:861
PDAC
26 Mar 15 08:47:37
RT @reuters_staylor: Rio Tinto to cut M&A headcount in saving drive via @reuters http://t.co/EmtiXDiPaa #mining #commodities $RIO #downturn…
Susan Taylor
26 Mar 15 08:43:13
Rio Tinto to cut M&A headcount in saving drive via @reuters http://t.co/EmtiXDiPaa #mining #commodities $RIO #downturn @silviaantonioli
FinSentS Euro 600
26 Mar 15 08:27:58
$RIO:LN Twiggy stands by cartel comment #RIO TINTO GROUP (GBP) http://t.co/i4MjzLiTvr #STOXX600
Market Realist
26 Mar 15 08:20:35
What Investors Should Know about Cliffs in a Very Weak Market $XME $VALE $CLF $RIO http://t.co/DAiVpGQbDQ
FinSentS UK100
26 Mar 15 08:19:03
$RIO:LN Twiggy stands by cartel comment #RIO TINTO GROUP (GBP) http://t.co/Oxx10BkTf8 #LDN100
Dr. Duru
26 Mar 15 07:34:42
Commented on: "It Had To Happen - An Outright Call For Iron Ore Collusion" http://t.co/MmpcLCPAed $BHP $CLF $FXA $RIO
Dr. Duru
26 Mar 15 07:24:57
My latest: It Had To Happen - An Outright Call For Iron Ore Collusion. http://t.co/nsnwW7lyr8 $RIO $BHP $FXA $AUDUSD $CLF
PDAC
26 Mar 15 05:50:51
RT @reuters_staylor: Rio Tinto dismisses 'harebrained' Fortescue iron ore plan http://t.co/Em8PhesVj8 via @reuters #commodities #mining $RI…
Susan Taylor
26 Mar 15 05:47:40
Rio Tinto dismisses 'harebrained' Fortescue iron ore plan http://t.co/Em8PhesVj8 via @reuters #commodities #mining $RIO $FMG
Rodrigo Chavez
26 Mar 15 05:02:33
Turquoise Hill sees 2015 production of 600K-700K oz. of gold concentrates $TRQ $RIO http://t.co/Ha4npljJ5v
Beverage Consulting
26 Mar 15 04:49:21
RT @GaryThomson16: I Know First Weekly Review: $RIO $ALU $MTL $BUD $AEG http://t.co/qrY1qg2t09 $SPY $SPX $QQQ
CourierMail Business
26 Mar 15 04:46:01
RT @LouiseBrannelly: .@RioTinto boss calls Twiggy Forrest's idea "harebrained" http://t.co/pu7aq7PsuE #ausbiz $FMG $RIO @FortescueNews http…
Louise Brannelly
26 Mar 15 03:54:28
.@RioTinto boss calls Twiggy Forrest's idea "harebrained" http://t.co/pu7aq7PsuE #ausbiz $FMG $RIO @FortescueNews http://t.co/yMuFGYGpxJ
US Banking News
26 Mar 15 03:52:51
Rio Tinto plc Stock Rating Reaffirmed by Barclays $RIO http://t.co/WWKrEw74IY
Tom Richardson.
26 Mar 15 03:30:10
RT @claudedwalker: Why Miners Are Undermining Your Wealth: http://t.co/wqt1Y6gj1s #ASX $FMG $BHP $RIO $WPL $OSH $STO
WKRB News
26 Mar 15 03:26:21
Rio Tinto plc’s Overweight Rating Reaffirmed at Barclays $RIO http://t.co/aUFXiuZCzx
US Banking News
26 Mar 15 03:21:12
Citigroup Inc. Reaffirms “Buy” Rating for Rio Tinto plc $RIO http://t.co/E3S1nu1p0O
				
				
By  +Follow October 2, 2013 10:23AM
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