Rio Tinto said it agreed to sell its 80 per cent stake in Queensland's Kestrel underground coal mine for $US2.25 billion ($2.9 billion) to a group including EMR Capital and Adaro Energy.
The sale is expected to be completed in the second half of 2018 and it requires approval from the Foreign Investment Review Board and the Queensland government, the company said.
The Kestrel mine is located in the Bowen Basin, 40 kilometres north-east of Emerald in central Queensland. Kestrel employs longwall mining to produce high quality coking and thermal coal products for export markets.
In 2017 the Kestrel mine produced 5.1 million tonnes of saleable coal, comprising 4.25 million tonnes of hard coking coal and 0.84 million tonnes of thermal coal. At the end of 2017, Rio Tinto reported marketable reserves for Kestrel of 146 million tonnes and mineral resources of 241 million tonnes.
Kestrel generated EBITDA of $US341 million and profit before tax of $US258 million, being Rio Tinto's attributable share, in 2017.
"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," Rio chief Jean-Sebastien Jacques said in a statement.
EMR Capital is a private equity manager. Adaro is an Indonesian coal company.
Rio said the sale of Kestrel will bring the total amount achieved from the recent divestments of Rio Tinto's Queensland coal assets to $US4.15 billion, with the funds to be used for general corporate purposes.
Rio last week sold its Hail Creek and Valeria coal assets in Queensland to Glencore for $US1.7 billion. In the past week, Rio also sold an undeveloped tenement in Queensland to Whitehaven Coal for $US200 million.
Including the pending proceeds from Kestrel, Rio has now announced asset sales worth more than $US11 billion since 2013.
Rio received $US2.69 billion from Yancoal last year for its Hunter Valley coal mine, rail and port assets. The Yancoal transaction followed the $US606 million sale of Rio's 40 per cent stake in the Bengalla coal mine to New Hope, and the $US220 million sale of the Mt Pleasant coal project in NSW in 2016.
Rio said it anticipates that Australian income tax will be payable on the Kestrel 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 $US500 million, however the quantum of tax payable will depend on the final proceeds - after taking into account working capital adjustments, the tax cost base at completion and the total of capital gains and losses realised by the Rio Tinto Australian tax consolidated group as December 31, 2018.
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