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Rio Tinto completes sale of Australian coal unit to Yancoal

Published 04 September 2017

Rio Tinto has completed the sale of its wholly-owned subsidiary Coal & Allied Industries to Yancoal Australia for $2.45bn.

The transaction also included customary adjustments for net debt and net working capital at completion, resulting in a total acquisition amount of $2.69bn.

Rio Tinto plans to use the proceeds from the sale for general corporate purposes.

According to the company, the taxable gain on the sale of the assets is expected to be largely offset by carried forward capital losses in Australia.

The transaction consists of sale of all of Rio Tinto’s shares in Coal & Allied Industries, and all assets and liabilities of Coal & Allied and its subsidiaries.

Rio Tinto said: “From today, Yancoal takes over management of Rio Tinto’s thermal coal business in the Hunter Valley region of New South Wales.”

The completion of the acquisition results in the transfer of production operations of the Hunter Valley coal mine to Yancoal. The Coal & Allied group owns a 67.6% stake in the Hunter Valley Operations mine.

Rio Tinto’s Australian unit also holds an 80% stake in the Mount Thorley mine, a 55.6% stake in the Warkworth mine, and a 36.5% stake in Port Waratah Coal Services.

In June, Rio Tinto had opted Yancoal as a preferred buyer of its Coal & Allied Industries, rejecting a counterbid launched by Glencore.

The decision was based on Yancoal’s agreement to expedite all deferred payments and make a single payment of $2.45bn to purchase Rio Tinto’s coal assets.

Swiss-based mining company Glencore was willing to pay $2.55bn for Rio Tinto’s thermal coal assets in Australia.


Image: Rio Tinto’s Mount Thorley Warkworth Mine in Australia. Photo: Copyright © 2016 Rio Tinto.