Rio Tinto plans to sell two Central Queensland coal mines
MINERALS powerhouse Rio Tinto plans to sell two of its Central Queensland coal mines as it cuts costs and focuses on higher profit sections of its business.
The news - reported internationally by the Wall Street Journal - is yet to be confirmed by either Rio Tinto or Deutsche Bank, the group understood to be handling the deal.
The British-Australian miner is reportedly looking to offload its controlling share in both Blair Athol and Clermont thermal coal mines for more than $1 billion.
The Journal reported that an unnamed coal executive said Rio was looking to sell its stakes in thermal coal projects so it could focus on its iron ore business.
The news fits with statements made by Rio chief executive Sam Walsh who told shareholders in February the company would look to save $4.7 billion by the end of 2014 through a number of cuts including "an even more aggressive portfolio approach" to sell assets that did not fit with its future plans.
International prices for thermal coal fell from $120 per tonne at the beginning of 2012 to just $85 when it bottomed out in October.
Prices recovered slightly but were yet to reach the $100 mark.HSBC Bank Australia chief economist Paul Bloxham told APN he would not be surprised with any miner trying to escape from the energy coal industry.
Mr Bloxham said as the United States increased its own use of locally-extracted shale gas, it was now creating a glut of the coal internationally.
"Shale gas is a big story globally and thermal (coal) is in the firing line," he said.
"If the United States is shifting away from thermal coal to shale gas, there is less demand for thermal coal overall."
Rio's Kestrel and Hail Creek mines - which both mine metal-making coal in the Bowen Basin - were not considered at risk of sale.