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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