Rio Tinto Says $4-Million Goodbye to Coal

Rio Tinto, the world’s second-largest miner, sold its 80-percent stake in the Kestrel coal mine in Queensland, Australia, for $2.25 billion, closing the last in a string of coal-exiting deals totaling $4 billion. This is the third asset sale deal Rio has  in a week. Last week, Rio announced the sale of its Hail Creek mine and resources to Glencore Plc for $1.7 billion, and right before that, it announced the sale of its Winchester South coal development to Whitehaven Coal for $200 million. 

Rio Tinto is now officially the only mining giant in the world that doesn’t have coal. While focusing on iron ore, aluminium, copper and bauxite this miner is hoping to attract those investors who are running away from coal. 

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12 minutes ago, Selvedina said:

Rio Tinto, the world’s second-largest miner, sold its 80-percent stake in the Kestrel coal mine in Queensland, Australia, for $2.25 billion, closing the last in a string of coal-exiting deals totaling $4 billion. This is the third asset sale deal Rio has  in a week. Last week, Rio announced the sale of its Hail Creek mine and resources to Glencore Plc for $1.7 billion, and right before that, it announced the sale of its Winchester South coal development to Whitehaven Coal for $200 million. 

Rio Tinto is now officially the only mining giant in the world that doesn’t have coal. While focusing on iron ore, aluminium, copper and bauxite this miner is hoping to attract those investors who are running away from coal. 

Seems pretty forward thinking. While coal is still a necessary fuel at the moment, its days are numbered--better to get out early while you can still sell it off. SMART!

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Rio made a really good deal with all these sales of coal assets. Earnings more than $8 billion. 

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As the world's second largest miner it certainly wasn't limited only on coal. Now this miner can completely focus on making money on  other ores which disposes. 
 

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I wouldn't be so sure about numbered days of coal, at least not so soon. Mining M&A activity totaled US$96.8 billion during 2017, with 10%  increase over the value of deals the previous year and more than US$92 billion of the 2017 total was spent on coal, iron ore and steel deals. China and India will certainly rely on coal for some time to come. 

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We should never forget that Rio walked away from its huge gold and copper mine in Bougainville - to avoid its responsibilities after causing a civil war, dumping its waste into the waterways of local people....

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On 3/28/2018 at 3:42 PM, Selvedina said:

Rio Tinto, the world’s second-largest miner, sold its 80-percent stake in the Kestrel coal mine in Queensland, Australia, for $2.25 billion, closing the last in a string of coal-exiting deals totaling $4 billion. This is the third asset sale deal Rio has  in a week. Last week, Rio announced the sale of its Hail Creek mine and resources to Glencore Plc for $1.7 billion, and right before that, it announced the sale of its Winchester South coal development to Whitehaven Coal for $200 million. 

Rio Tinto is now officially the only mining giant in the world that doesn’t have coal. While focusing on iron ore, aluminium, copper and bauxite this miner is hoping to attract those investors who are running away from coal. 

But they’ll fill in all the holes and repair all the landscapes they’ve decimated, right?

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This is about Rio Tinto taking the profits and leaving Australian government to pay for the clean-up.

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On 3/28/2018 at 3:42 PM, Selvedina said:

Rio Tinto, the world’s second-largest miner, sold its 80-percent stake in the Kestrel coal mine in Queensland, Australia, for $2.25 billion, closing the last in a string of coal-exiting deals totaling $4 billion. This is the third asset sale deal Rio has  in a week. Last week, Rio announced the sale of its Hail Creek mine and resources to Glencore Plc for $1.7 billion, and right before that, it announced the sale of its Winchester South coal development to Whitehaven Coal for $200 million. 

Rio Tinto is now officially the only mining giant in the world that doesn’t have coal. While focusing on iron ore, aluminium, copper and bauxite this miner is hoping to attract those investors who are running away from coal. 

2.25 billion for one mine? Seems bit expensive 

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As long as the marginal cost enables coal production with a profitable sale, there is money in coal, and there will be for at least decades. Companies will buy there way in and out, as they manage risk and returns. Coal a declining industry, it is, and has been since, yup, you said it, oil and gas came on the scene in a big way. So don't give renewables the credit, just another kick in the teeth. But still money to be made in the right markets. 

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(edited)

On 3/28/2018 at 3:56 PM, Rodent said:

Seems pretty forward thinking. While coal is still a necessary fuel at the moment, its days are numbered--better to get out early while you can still sell it off. SMART!

Not really.  Coal assets can be sold off at any time as long as coal has a profitable future.  And it will - and not simply for coking coal for steel-making.  The real future value in coal is as a precursor chemical for the manufacture of diesel.  Coal diesel is remarkably pure, it burns very cleanly, and you don't get those NOx pollutants.  For years the Governor of Montana would drive around in a Volkswagen Jetta diesel running on coal distilled diesel, he would rave about it to anyone and everyone. (At that time the Jetta was just about the only passenger car with a diesel engine.)  

Remember that in 2020 the IMO  (the marine regulatory agency) has Regulations requiring all ocean ships to run on 0.5% sulfur fuels, and bunker does not meet that spec by a long shot.  While efforts are being made to create a low-sulfur heavy fuel oil, how much will be available is murky - probably not nearly enough.  The substitute liquid fuel will be methanol, but that still requires conversion expenditures.  So most ship owners will end up buying marine diesel, basically #2 heating oil and possibly some additives tossed in. 

Where is all this diesel going to come from?  Nobody has it on tap, so it has to compete with, and crowd out, truck diesel.  That means that the buyer with the deepest pockets gets to buy the diesel. Not the trucker.

What all this does is create a huge new market demand for coal diesel.  I anticipate that coal will be a valuable feedstock soon enough. The guys that bought those coal mines will have the last laugh. Big bucks coming in coal, give it a few years. 

Edited by Jan van Eck
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On 7/17/2018 at 12:19 AM, Jan van Eck said:

Not really.  Coal assets can be sold off at any time as long as coal has a profitable future.  And it will - and not simply for coking coal for steel-making.  The real future value in coal is as a precursor chemical for the manufacture of diesel.  Coal diesel is remarkably pure, it burns very cleanly, and you don't get those NOx pollutants.  For years the Governor of Montana would drive around in a Volkswagen Jetta diesel running on coal distilled diesel, he would rave about it to anyone and everyone. (At that time the Jetta was just about the only passenger car with a diesel engine.)  

Remember that in 2020 the IMO  (the marine regulatory agency) has Regulations requiring all ocean ships to run on 0.5% sulfur fuels, and bunker does not meet that spec by a long shot.  While efforts are being made to create a low-sulfur heavy fuel oil, how much will be available is murky - probably not nearly enough.  The substitute liquid fuel will be methanol, but that still requires conversion expenditures.  So most ship owners will end up buying marine diesel, basically #2 heating oil and possibly some additives tossed in. 

Where is all this diesel going to come from?  Nobody has it on tap, so it has to compete with, and crowd out, truck diesel.  That means that the buyer with the deepest pockets gets to buy the diesel. Not the trucker.

What all this does is create a huge new market demand for coal diesel.  I anticipate that coal will be a valuable feedstock soon enough. The guys that bought those coal mines will have the last laugh. Big bucks coming in coal, give it a few years. 

First I have heard of that and to be honest I can't see why Coal source diesel would produce less NOX. Assuming it burns at a similar temperature as conventional diesel then you will get similar levels of NOX formation. 

 

 

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On 7/19/2018 at 7:46 AM, NickW said:

First I have heard of that and to be honest I can't see why Coal source diesel would produce less NOX. Assuming it burns at a similar temperature as conventional diesel then you will get similar levels of NOX formation.  

 

 

Haven't heard of Fischer–Tropsch process? Germans used it extensively during WWII. Check it out, may be a fuel of the brave new world. Especially in Australia, where conventional exploration facing opposition from greenies and most of its fuel is imported. 

@Jan van Eck, using GTL process may make more sense. For marine transportation retrofitting freighters with LNG fuel tanks should be fairly straight forward, although not sure on cost. 

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Jan, hopefully the coal will not need to be used but there will probably be plenty if it is ever needed. The natural gas can is a preferable fuel.It was used as automotive fuel in WW!. It will run any ICE. 

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8 hours ago, DanilKa said:

Haven't heard of Fischer–Tropsch process? Germans used it extensively during WWII. Check it out, may be a fuel of the brave new world. Especially in Australia, where conventional exploration facing opposition from greenies and most of its fuel is imported. 

@Jan van Eck, using GTL process may make more sense. For marine transportation retrofitting freighters with LNG fuel tanks should be fairly straight forward, although not sure on cost. 

Of course I have. I didn't ask how Synthetic diesel is produced. The question as why it should produce less NOX than conventional diesel

The formation of NO / NO2 comes from the  oxidation of Nitrogen, a process which is primarily driven by the heat of the reaction and the pressure in the combustion chamber.

Please explain how Diesel from this process produces less NOX than Conventional diesel.

Happy to accept it does but it would be nice to see the evidence to support this claim.  

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6 hours ago, ronwagn said:

Jan, hopefully the coal will not need to be used but there will probably be plenty if it is ever needed. The natural gas can is a preferable fuel.It was used as automotive fuel in WW!. It will run any ICE. 

Conversion to Natural Gas in Diesels is the most sane option. London should have done this to its diesel bus fleet 15 years ago.

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On 7/20/2018 at 8:00 PM, NickW said:

Conversion to Natural Gas in Diesels is the most sane option. London should have done this to its diesel bus fleet 15 years ago.

Agree, but there seems to be options for cleaner diesel/engines which makes more compelling for mass transport since they can use existing refueling infrastructure and no risk of cylinders bursting. LNG may be a better option where it is readily available. 

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Danika, Diesel fans have been hearing all kinds of claims for clean diesel but it has NEVER panned out as promised. Natural gas is a proven clean fuel and the technology is mature. It is also much less expensive and the infrastructure is available everywhere except Montana and the Dakotas. California, Texas, and Oklahoma have the best infrastructure. 

See station map: http://www.cngprices.com/station_map.php

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