PERTH (miningweekly.com) – Switzerland-headquartered mining major Glencore will acquire diversified miner Rio Tinto’s 82% interest in the Hail Creek coal mine and adjacent coal resources, in Queensland, as well as a 71.2% interest in the Valeria coal resource for $1.7-billion in cash, the company announced on Tuesday.

Nippon Steel Australia, Marubeni Coal and Sumisho Coal Development own the remaining 18% of the Hail Creek mine and each joint venture partner has the right to sell its share to Glencore through a "tag-along" right, which could result in additional consideration of up to $340-million.

The transaction, which is subject to regulatory approvals and is expected to close in the second half of 2018, follows on Glenore's acquisition of a 49% stake Rio Tinto's Hunter Valley mines last year, through a deal with Yancoal.

Rio Tinto has made a strategic decision to exit coal and focus on growth in iron-ore, copper and. The company’s final coal asset is the Kestrel mine, which is subject to a separate sales process.

The Hail Creek mine, some 120 km from Mackay, produced 9.4-million tonnes of coal in 2017, and delivered an earnings before interest, tax, depreciation and amortisation of $408-million to Rio’s coffers in 2017. At the end of December, the Hail Creek operation had a Joint Ore Reserves Committee (JORC) complaint resources of 794-million tonnes with proven and probable reserves of 142-million tonnes.

The Valeria thermal coal deposits located 265 km west of Rockhampton and has a JORC resources of 762-million tonnes.

"The sale of Hail Creek and Valeria delivers compelling value for our shareholders and continues our strategy of strengthening our portfolio, focusing on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities. We expect that Hail Creek will continue to perform strongly under its new owner, securing long-term jobs and continuing its contribution to the State of Queensland," commented Rio Tinto CEO Jean-Sébastien Jacques.

Should the transaction be completed, Hail Creek will join Glencore's existing Australian coal portfolio, which produced more than 87-million tonnes of saleable coal last year from 17 operational mines in Queensland and New South Wales.