Resources giant Rio Tinto announced the US $1.02 billion sale of its stake in Australia's Clermont thermal coal mine Monday as it seeks to shore up its ailing bottom line. Anglo-Australian company Rio said it had reached a binding agreement to sell its 50.1 percent share of the project in Queensland to Swiss commodities giant Glencore Xstrata and Japan's Sumitomo as part of its drive to streamline operations.
"The sale of Clermont Mine will allow us to realise value for our shareholders as we continue optimising our portfolio," said Rio's chief financial officer Chris Lynch in a statement to the Australian stock exchange. "It also demonstrates our focus on strengthening our balance sheet and taking a disciplined approach to allocating capital across the group."
The coal mined at Clermont is burned to produce electricity. Rio said the sale - subject to the agreement of its Japanese partners in the Clermont venture Mitsubishi Development, J-Power Australia and JCD Australia - took divestments announced or completed this year to US $2.92 billion. That includes the sale of its controlling stake in Australia's Northparkes gold and copper mine to China Molybdenum, the off-loading of a majority holding in South African copper producer Palabora to a Chinese consortium and disposal of the Eagle nickel and copper project in the United States to Canada-based Lundin Mining.
Earlier this month, Rio said it was making steady inroads on cost-cutting after posting a 71 percent slump in profits in the six months to June owing to softer commodity prices and slowing demand from key market China. Despite the Clermont deal, which is expected to complete in the first quarter of 2014, Lynch said Rio "remains committed to a long-term future in central Queensland" at its other mines.
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