SYDNEY--Rio Tinto PLC (RIO) is in advanced talks to sell its
stake in the Clermont coal mine in eastern Australia for around
US$1 billion to Glencore Xstrata PLC (GLEN.LN) and Japan's Sumitomo
Corp. (8053.TO), people familiar with the matter said.
Glencore and Sumitomo, which could sign the deal later Friday,
would each acquire half of Rio's 50.1% stake in the mine in
Queensland state, one of the people said.
Rio Tinto is slashing costs and spending to cut debt that
swelled to almost US$19 billion last year, and help protect the
company's single-A credit rating amid shaky demand for
commodities.
The company wants to sell several assets, including an iron-ore
mine in Canada and stakes in coal mines in Australia and
Mozambique. The miner in July agreed to sell its majority stake in
Australian copper-and-gold mine Northparkes to China Molybdenum Co.
for US$820 million.
The Wall Street Journal reported in April that Rio Tinto had
hired Deutsche Bank AG to sell the Clermont mine, which produces
mostly thermal coal for use in power generation.
Rio Tinto received bids for its majority stake in Clermont from
units of India's Adani Enterprises Ltd (512599.BY), Dutch trading
house Trafigura Beheer BV and Australia-listed New Hope Corporation
(NHC.AU), though all three fell short of Rio's expectations, people
familiar with the matter said last month.
Coal assets have been hard to sell, due to a growing oversupply
of the fuel in the seaborne market and a slowdown in the pace of
demand from key buyers like China. This has resulted in a slump in
the commodity's price.
A metric ton of thermal coal exported from Australia cost
US$78.70 last week, down 13% on the start of the year and less than
half its peak in July 2008.
Clermont--discovered accidentally by companies exploring for
gold in 1978--is one of Rio Tinto's newest and largest coal
operations, and produces about 12 million tons of coal a year. The
mine opened in 2010 and is expected to supply up to 165 million
tons of thermal coal over the next 16 years.
Rio Tinto's partners in the mine are Japan's Mitsubishi
Development Pty. Ltd., J-Power Australia Pty. Ltd. and J.C.D.
Australia Pty. Ltd.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Gillian
Tan at gillian.tan@wsj.com
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