Rio Tinto has agreed to sell its interests in the Hail Creek coal mine and Valeria coal project in Queensland to Glencore for $US1.7 billion ($2.2 billion).
Glencore’s acquisition includes Rio’s 82 percent share in Hail Creek and a 71.2 percent interest in Valeria.
The Hail Creek Complex is in the northern Bowen Basin, 120km south-west of Mackay. It includes the the Hail Creek, Lake Elphinstone and Mount Robert tenements.
Hail Creek is a large-scale open cut mining operation which first produced in 2003.
In 2017, the Hail Creek mine produced 9.4 million tonnes (Mt) of saleable coal, comprising 5.25Mt of hard coking coal and 4.13Mt of thermal coal.
Rio Tinto chief executive Jean-Sébastien Jacques commented: “We expect that Hail Creek will continue to perform strongly under its new owner, securing long-term jobs and continuing its contribution to the state of Queensland.”
Valeria is a large undeveloped coal project in the central Bowen Basin, about 40km north-west of Emerald. It contains 762Mt of coal mineral resources, and is expected to produce high-energy, low-ash thermal and coking coal once developed.
Rio expects to complete the sale in the second half of 2018, once the Foreign Investment Review Board (FIRB), the Queensland Government and others have approved the deal.
If approved, the purchase would be Glencore’s second major coal acquisition in Australia in as many years.
Last year, Glencore secured a 49 percent stake in the Hunter Valley Operations (HVO) coal mine in New South Wales in a deal that followed Yancoal acquisition of Rio’s Coal & Allied division.
The remaining 18 percent of the Hail Creek mine is owned by Nippon Steel, (8 percent), Marubeni Coal (6.67 percent) and Sumisho Coal Development (3.33 percent).
Each JV partner has the right to sell its share to Glencore through a “tag-along” right, which could result in additional payment of up to $US340 million.
This article was originally written for Australian Mining and can be read here.