As part of its coal exit, Rio Tinto has entered into a binding agreement with a consortium comprising private equity manager EMR Capital (EMR) and PT Adaro Energy Tbk (Adaro), an Indonesian listed coal company, for the sale of its entire 80% interest in the Kestrel underground coal mine in Queensland, Australia, for $2.25 billion.
|Rio Tinto’s Kestrel Mine, Queensland, Australia. Image: ©Rio Tinto|
Rio Tinto chief executive J-S Jacques said that the sale of Kestrel, combined with the announced divestments of Hail Creek and Rio Tinto’s undeveloped coal projects, delivers exceptional value to shareholders.
The transaction is subject to customary conditions precedent being satisfied, including the receipt of regulatory approvals from Australia’s Foreign Investment Review Board and the Queensland Government.
Subject to all regulatory approvals and other conditions precedent being satisfied, completion is expected to occur in the second half of 2018. It will bring the total amount achieved from the recent divestments of Rio Tinto’s Queensland coal assets to $4.15 billion, with the funds to be used for general corporate purposes.
EMR and Adaro will jointly manage and operate Kestrel, leveraging EMR’s experience in acquiring and operating mining operations as well as Adaro’s wealth of sector expertise as an experienced coal producer.
Jason Chang, Chief Executive Officer of EMR, said, “We are pleased to announce this milestone transaction, which represents a once in a generation opportunity. I am excited about the expertise that EMR and Adaro can bring to these operations.
“Coking coal is one of our four core commodities and it offers excellent demand and supply fundamentals for decades into the future.”
Garibaldi Thohir, Chief Executive Officer of Adaro, agreed that the acquisition of the Kestrel mine was a significant milestone.
“This is one of our largest investments outside of Indonesia. We are thrilled at the growth which this transaction will bring and look forward to working closely with EMR in making this venture a resounding success.”
The Kestrel mine is located in the Bowen Basin, 40km north-east of Emerald in central Queensland, Australia. Kestrel employs longwall mining to produce high quality coking and thermal coal products for export markets.
In 2017, the Kestrel mine produced 5.1 million tonnes of saleable coal, comprising 4.25 million tonnes of hard coking coal and 0.84 million tonnes of thermal coal.