JOHANNESBURG (miningweekly.com) – Diversified miner Rio Tinto will sell its 80% stake in the Kestrel underground coal, in Queensland, Australia, to private equity manager EMR Capital and Indonesia-listed coal company PT Adaro Energy for $2.25-billion.
“The sale of Kestrel, together with the announced divestments of Hail Creek and our undeveloped coal projects, delivers exceptional value to our shareholders and will leave our portfolio stronger and more focused on delivering the highest returns through targeted allocation of capital,” said Rio Tinto CE Jean-Sébastien Jacques in a statement on Tuesday.
The Kestrel mine is located in the Bowen basin, 40 km north-east of Emerald, in central Queensland.
The mine produced 5.1-million tonnes of saleable coal in 2017, comprising 4.25-million tonnes of hard coking coal and 840 000 t of thermal coal.
As at December 31, the mine had marketable reserves of 146-million tonnes and mineral resources of 241-million tonnes.
The sale of Kestrel will complete the miner's exit from coal, with its focus now on iron-ore and copper .Last week, Rio Tinto sold two coal assets, including its 82% interest in the Hail Creek coal mine and its interest in the Valeria coal resource for A$1.7-billion, as well as its 75% interest in the Winchester South coal project for A$200-million.
Completion of the sale is expected in the second half of this year. It will bring the total amount achieved from the recent divestments of Rio Tinto's Queensland coal assets to $4.15-billion, with the funds to be used for general corporate purposes.
“Rio Tinto anticipates that Australian income tax will be payable on sale proceeds, which are in excess of the cost base of the assets at completion.”
The currently estimated tax payable is in the order of $500-million; however, the quantum of tax payable will depend on the final proceeds, the tax cost base at completion and the total of capital gains and losses realised by the Rio Tinto Australian tax consolidated group at December 31, 2018.
Analysts at BMO Capital Markets said the purchase price was higher than its estimated value for the Kestrel mine, at about $1.3-billion.