Rio Tinto share price: Miner in ‘serious talks’ over sale of Australian coal assets
Rio Tinto (LON:RIO) is in “serious talks” with X2 Resources over the sale of three of the miner’s Australian coal mines, the Financial Times has reported. According to people familiar with the matter, the discussions X2, the private-equity firm founded by former Xstrata CEO Mick Davis, are at an early stage and have generated “solid interest” from both sides. The deal, which may fetch $3-4 billion, could take two months to finalise and may also extend to include Rio’s metallurgical coal assets in Queensland. The respective companies have not yet commented on the matter.
The three Rio mines — Bengalla, Hunter Valley Operations and Mount Thorley Warkworth — are close to assets owned by rival Glencore (LON:GLEN). The rival miner, which acquired Xstrata in 2013, has previously held talks with Rio over the potential for future joint ventures, but the two sides have not been able to reach an agreement that would see them working together.
Coal accounted for just seven percent of Rio Tinto’s revenues last year, reflecting a recent drop in coal prices. A sale of the firm’s Australian coal operations would mark the latest move by the group’s CEO, Sam Walsh, to divest less-profitable assets as the London-based company focuses on iron ore and copper. It would also be the first purchase for X2’s Davis since he raised several billions of dollars from investors to pursue mining acquisitions. Last year, he approached BHP Billiton (LON:BLT) with an offer to buy a collection of its non-core mines but the Anglo-Australian commodities giant stuck to a plan to spin off the non-core assets into a newly listed company – South 32.
Rio Tinto’s share price has declined today. By 09:30 BST, the stock had fallen 1.31 percent to 2,656.14p.
As of 11:04 BST, Tuesday, 30 June, Rio Tinto plc share price is 2,660.75p.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.