Published on 13 April 2018

CSR

Rio tinto: the giant miner sells its last coal mine

The Anglo-Australian mining giant, Rio Tinto, has confirmed its withdrawal from the coal sector through an announcement made on March 27,  citing a $2.25 billion-dollar agreement to hand over control of a coal mine in Australia. 

Rio Tinto Miner has sold all its coal assets in recent years.
@RioTinto

By the end of the year, Rio Tinto will sell its entire 80% stake in the Kestrel mine in Queensland, located in north-east Australia, to an outside actor. The sale will be carried out by a consortium composed of the investment company EMR Capital and the Indonesian mining company PT Adaro, which specializes in coal.

For Rio Tinto, this is the second coal transaction to take place in Australia in just the last few days. Most notably, it is the sale of the company's latest coal asset that makes it the first major global miner to exit the fossil fuel production field.

The only major miner to leave coal

"The sale of Kestrel, along with the announced divestiture of Hail Creek (ed. Glencore a few days ago) and other developing projects in the coal business, creates tremendous value for our shareholders and strengthens our portfolio," says the Chief Executive of Rio Tinto, Jean-Sébastien Jacques.

In total, Rio Tinto will make $4.15 billion dollars with the sale of its coal assets in Queensland. With these divestments, the group plans on turning the page from coal to focus on raw materials such as copper, aluminium or iron ore.

"We view Rio's execution on its exit from coal, at least in a cyclical context, very positively,” said Tyler Broda, analyst at RBC Capital Markets, in an interview with the Financial Times. "Additionally, Rio will become the only major without coal assets, certainly helpful for environmental, social and governance (ESG) conscious investors."

BHP Billiton leaves the World Coal Association

Indeed, other major miners such as Anglo American, BHP Billiton, Glencore and Vale, have not made such a move. It should be noted, however, that BHP Billiton, the largest mining company in the world, published a detailed review of its commitments in professional organisations last December at the One Planet Summit.

The industrial giant announced its withdrawal from the World Coal Association, the largest organization lobbying for coal on the planet, in the first quarter of 2018. This decision was motivated by differing opinions on climate and energy policies.

Two other pro-coal organisations are in the spotlight after the BHP Billiton decision: The United States Chamber of Commerce (USCC) and the Minerals Council of Australia (MCA). The Australian company has denounced their critical position against the Paris Agreement, which was signed at COP21 in 2015.

Ludovic Dupin @LudovicDupin with AFP


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