One of the world’s leading mining operators has agreed to sell two of its flagship assets, in a deal worth $1.7 billion.
Rio Tinto has entered into an agreement with Glencore for the sale of its entire interests in the Hail Creek coal mine and the Valeria coal development project in Queensland, Australia in a deal worth $1.7 billion.
Through the sale, Glencore will receive Rio Tinto’s 82 per cent interest in the Hail Creek operating mine, as well as its 71.2 percent interest in the Valeria project.
The deal comes at a time where the company also announced a major new debt reduction programme, through a bond purchase and redemption plan for up to $3.5 billion/
The programme is part of the Rio Tinto Group's ongoing capital management plan and follows the successful completion of a series of $10 billion US dollar-denominated note redemptions and repurchases in 2016 and 2017.
Rio Tinto chief executive J-S Jacques said "The sale of Hail Creek and Valeria delivers compelling value for our shareholders and continues our strategy of strengthening our portfolio, focusing on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities.
"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."
The Hail Creek Complex is located in the northern Bowen Basin, 120km south-west of Mackay, in central Queensland and comprises the Hail Creek, Lake Elphinstone and Mount Robert tenements. Hail Creek is a large scale open cut mining operation which commenced production in 2003.
Last year, the Hail Creek mine produced 9.4 million tonnes of saleable coal, comprising 5.25 million tonnes of hard coking coal and 4.13 million tonnes of thermal coal.
Valeria is a large undeveloped coal project located in the central Bowen Basin, approximately 40km north-west of Emerald. The Valeria tenements contain 762 million tonnes of coal mineral resources.
Once developed, Valeria is expected to produce high energy, low ash thermal and coking coal products.