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Rio Tinto to sell stake in Winchester South coal project to Whitehaven

EBR Staff Writer Published 23 March 2018

Mining giant Rio Tinto has agreed to sell its stake of 75% in the Winchester South coal development project in Queensland, Australia to Whitehaven Coal for $200m.

Located in the northern Bowen Basin, about 30km south-east of Moranbah, Winchester South is an undeveloped coal project containing 356 million tonnes of coal mineral resources.

It is located in the same zone as the tier one Moranbah, Grosvenor and Peak Downs coal mines, which are all into production.

The Winchester South coal mine is expected to produce coking coal and thermal coal products after its development. The Scentre Group holds the remaining 25% in this Queensland coal mine.

For Whitehaven, the Winchester South coal project is a major strategic acquisition which provides it an opportunity to develop and operate a high-quality, large scale coking coal mine, located in one of the world’s premier coking coal basins.

Whitehaven Coal managing director and CEO Paul Flynn said: “Winchester South will form a key part of the company’s longer term growth plan and complements our Vickery project in the Gunnedah Basin as another high quality asset which will help Whitehaven respond to the strong and growing demand for premium coking coal that exists in Asian markets.”

As per the terms of the deal, Rio Tinto will pay $150m to Whitehaven on the date of closing of the deal and 12 months after that it will pay the remaining payment of $50m.

The transaction is expected to close in the second quarter of this year, depending on meeting of customary conditions including receipt of certain regulatory approvals.

Rio Tinto CEO J-S Jacques said: “We believe this agreement for the sale of Winchester South represents the best option for the future development of the project while delivering attractive value for Rio Tinto as we continue to streamline our portfolio.

Rio Tinto revealed that in a separate process, it is looking to sell its stake in the Kestrel underground mine, which is its remaining Australian coal asset.

Earlier in the week, it agreed to sell its stakes in the Hail Creek coal mine and the Valeria coal development project in Queensland to Glencore for $1.7bn.

Last year, Rio Tinto divested Coal & Allied Industries, its Australian coal unit to Yancoal Australia for a sum of $2.45bn.


Image: Whitehaven Coal to buy into Rio Tinto’s stake in the Winchester South coal project. Photo: courtesy of     Whitehaven Coal Limited.