Coal news and updates

Rio Tinto sells shuttered Australian thermal coal mine, eyes selling another

Rio Tinto Coal Australia has started its coal assets disposal program with the sale of the coal producer's shuttered Blair Athol thermal coal mine to Australian-listed coal-to-liquid fuels company Linc Energy, said RTCA and Linc Energy in separate statements Thursday.

They did not disclose the sale value.

The Blair Athol mine closed in November last year when it was superceded by Rio Tinto's Clermont mine also located in Queensland's Bowen Basin coal field.

"The Rio Tinto Coal Australia-managed Blair Athol coal joint venture has signed a conditional sale and purchase agreement to transfer its interests in the Blair Athol mine to New Emerald Coal, a subsidiary of Linc Energy," said RTCA in a statement on the company's website.

The Blair Athol joint venture comprised RTCA and Japanese interests including electricity utility J-Power.

The transaction is expected to be finalized within six months, and involves the transfer of the Blair Athol mining tenure, certain on-site assets, and infrastructure and environmental obligations said RTCA, without revealing any details on the asset's sale price.

RTCA spokesman Graham Witherspoon said the company was not releasing details of the Blair Athol transaction price as it was "confidential".

Linc Energy's 100%-owned subsidiary New Emerald Coal acquired the Blair Athol mine for "no upfront cost," and in fact the Blair Athol joint venture is making a contribution toward the rehabilitation of the mine site between 2016 and 2019, said Linc Energy in a statement to the Australian Securities Exchange.

The New Emerald Coal subsidiary would have access to train-loading and rail capacity for the Blair Athol mine, and shipment capacity at Abbot Point port for coal exports under a commercial agreement with RTCA.

Linc Energy said it expects to restart coal mining next year at Blair Athol for which the company has a production target of 3 million mt/year, and similar to the mine's production level in its last operating years.

"The Blair Athol mine offers a unique opportunity to New Emerald Coal by adding an established asset with minimal efforts and costs to restart the mine," said Michael Mapp, president of Linc Energy's coal division in the company's statement.

The Australian company which manufactures fuel from underground coal deposits is developing a thermal coal mine at its Teresa project in the Bowen Basin coal field, and in 2010 Linc negotiated a royalty cash flow stream worth around A$1.5 billion ($1.4 billion) on a discounted price basis with the sale of its Galilee Basin coal tenements to Indian firm Adani.

ADANI, NEW HOPE AND TRAFIGURA LINKED TO CLERMONT MINE SALE

Meanwhile, there have been media reports in Australia that three companies -- Indian coal trader Adani, Netherlands-based trader Trafigura and Australian-listed coal producer New Hope Group -- had expressed interest in acquiring RTCA's Clermont thermal coal mine in Queensland.

But these could not be confirmed.

New Hope Group spokeswoman Lisa Backhouse declined to comment saying, the company "does not discuss these issues publicly."

Trafigura's Singapore-based spokeswoman Joscelin Kwek said the company was "unable to make any comment on this matter."

Production at Clermont started in 2010 and is being ramped up to 12 million mt/year of thermal coal for the Asian seaborne market.

Rio Tinto has a 50.1% stake in the Clermont mine which it runs on behalf of other joint venture partners including, Mitsubishi with 31.4%, Japanese utility J-Power (15%) and Japan Coal Development Australia with 3.5%, according to information on RTCA's website.

RTCA said through a spokesman that it did not want to comment on market speculation regarding its Clermont mine.

Rio Tinto chief executive Sam Walsh has signalled the possibility of sales of the company's Australian coal assets to meet a company-wide target for savings of $5 billion by 2014.

Analysts at the Sydney branch of Canadian bank RBC Capital Markets headed by Chris Drew said in a June report that Rio Tinto could raise A$8 billion from selling stakes in its Australian coal mines.

Source: Platts