Bengalla Archives - Core Sector Communique

Rio Tinto agrees sale of interest in Bengalla Joint Venture for US$606 million

Chawm Ganguly — Wed, 30 Sep 2015 03:38:51 +0000

Rio Tinto has reached a binding agreement for the sale of its 40 per cent interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation Limited for US$606 million¹.

Bengalla is the smallest of three coal mines in the Hunter Valley of New South Wales in which Rio Tinto holds an interest, producing 8.6 million tonnes (3.4 million tonnes based on a 40 per cent Rio Tinto share) in 2014.

Rio Tinto has now announced or completed US$4.5 billion² of divestments since January 2013, with the agreed sale of its interest in the Bengalla Joint Venture.

Rio Tinto Copper & Coal chief executive Jean-Sébastien Jacques said “This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets in the mining industry.

“It demonstrates our commitment to further strengthening our balance sheet, maintaining a disciplined approach to allocating capital across the Group and delivering strong returns for shareholders through the cycle.

“Bengalla mine is a robust, well-managed business with a productive workforce and we believe it will have a positive future under the new owner with different capital allocation priorities. We expect the business to make a significant and ongoing contribution to the New South Wales economy. Rio Tinto will ensure high safety and environmental standards are maintained through the transition to the new owners.”

Rio Tinto and Mitsubishi Development have recently agreed a simplification to the ownership structure of Coal & Allied which helps enable this transaction. Under the agreement, Rio Tinto will assume 100 per cent ownership of Coal & Allied. Mitsubishi Development will move from holding a 20 per cent stake in Coal & Allied to holding a direct 32.4 per cent stake in the Hunter Valley Operations mine.

Subsequent to the completion of this transaction, Rio Tinto as a 100 per cent owner of Coal & Allied will:

receive all consideration set out above associated with the sale of Rio Tinto’s interest in the Bengalla Joint Venture;
hold a 67.6 per cent interest with management rights in the Hunter Valley Operations mine;
hold interests of 80 per cent and 55.6 per cent respectively, with management rights, in the integrated Mount Thorley and Warkworth operations; and
hold a 100 per cent interest in the Mount Pleasant project.

The transactions are subject to certain conditions precedent being met, including the pre-emption rights of the Bengalla Joint Venture partners.

The sale of the interest in the Bengalla Joint Venture is expected to close in the first quarter of 2016.

Rio Tinto manages Coal & Allied’s coal operations, which are located in the Hunter Valley region of New South Wales, Australia. The operations include Mount Thorley Warkworth, Hunter Valley Operations and Bengalla. The Mount Pleasant project is also owned by Coal & Allied.

Hunter Valley Operations and Mount Thorley Warkworth are multi-seam, multi-pit, open-cut mining operations that produced 4.8 million tonnes of semi-soft coking coal and 21 million tonnes of thermal coal in 2014.

Mount Pleasant is a large-scale, thermal coal greenfield project with total marketable reserves of 474 million tonnes³.

Following the restructure of Coal & Allied, Hunter Valley Operations will be owned by Coal & Allied (67.6 per cent) and Mitsubishi Development (32.4 per cent).

Mount Thorley is owned by Coal & Allied (80 per cent) and POSCO Australia (20 per cent). Warkworth is owned by Coal & Allied (55.57 per cent), Mitsubishi Development (28.9 per cent), Nippon Steel & Sumitomo Metal Australia (9.53 per cent) and Mitsubishi Materials Australia (6 per cent).

The Mount Pleasant project is owned by Coal & Allied (100 per cent). Coal & Allied holds a 30 per cent direct and 6.45 per cent indirect interest in Port Waratah Coal Services, the owner and manager of the Kooragang and Carrington Coal Terminals in the Port of Newcastle.

¹ Sale consideration is AU$865 million converted into US$606 million at the current spot rate of 0.70.
²Amount is before finalisation of net debt and working capital adjustments.
³This estimate of total marketable reserves was reported on page 199 of the Rio Tinto 2014 Annual Report dated 4 March 2015 and released to the ASX on 6 March 2015. The Competent Person responsible for this reserve estimate was Mr Andrew Prentice, AusIMM. Rio Tinto confirms that it is not aware of any new information or data that materially affects this reserve estimate, that all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed, and that the form and context of the reserve estimate has not been materially modified.

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Rio Tinto : Fourth quarter 2012 operations review

Chawm Ganguly — Tue, 15 Jan 2013 06:05:35 +0000

Rio Tinto chief executive Tom Albanese said “This was another year of strong operational performance across the Group. We achieved record annual iron ore production and shipments as our expansion programme continues on schedule, delivering industry leading returns for our shareholders. Our copper, bauxite, alumina, thermal coal and titanium dioxide businesses all delivered substantial production increases on 2011 levels.

“Markets remain volatile, but our business continues to perform well. Across the Group we are taking action to roll back unsustainable cost increases. This further enhances our resilience and competitive edge as we enter 2013.”

• Record global iron ore shipments of 247 million tonnes (100 per cent basis) were achieved in 2012 despite severe weather disruptions and a significant maintenance shut-down during the year. Global iron ore production for the full year was 253 million tonnes (Rio Tinto share 199 million tonnes), four per cent higher than 2011. Pilbara iron ore production of 239 million tonnes (Rio Tinto share 191 million tonnes) set another annual record, four per cent higher than in 2011. Current nameplate capacity in the Pilbara has risen from 225 Mt/a at the start of 2012 to 237 Mt/a through de-bottlenecking and productivity improvement, with minimal capital spend.

• Total mined copper production for 2012 was six per cent higher than in 2011, due to expected recovery in ore grades at Kennecott Utah Copper and Escondida. Refined copper production improved at Kennecott Utah Copper following scheduled smelter maintenance during the second quarter.

• On 5 November 2012 Rio Tinto announced that Oyu Tolgoi had signed a binding agreement with a Chinese power company for the supply of electricity to Oyu Tolgoi. Commissioning of the ore-processing equipment began in mid-November and first ore was processed through the concentrator on 2 January 2013. First concentrate production will follow within one month and commercial production is expected to commence by June 2013.

• Bauxite and alumina production in 2012 were 11 per cent and 12 per cent higher than 2011, driven by increased third party demand for bauxite and expanded refining capacity at Yarwun. Aluminium production was 10 per cent lower than in 2011, as ramp up to normal capacity continued following resolution of the Alma labour dispute.

• Thermal coal production for the full year was 16 per cent higher than in 2011, reflecting increased plant capacity at Bengalla, the continued ramp-up at Clermont and the reversal of one-off disruptions in the fourth quarter of 2011. Hard coking coal production was nine per cent lower than in 2011, due to the impact of planned dragline maintenance at Hail Creek and a major preparation plant shutdown at Kestrel as part of its mine expansion project.

• Titanium dioxide feedstock production for the full year increased 11 per cent from 2011 following a successful furnace rebuild at Rio Tinto Fer et Titane and an increase in attributable volumes from Richards Bay Minerals (RBM).

• During the quarter, Rio Tinto announced further sales of non-core businesses, including a binding agreement to sell its interest in Palabora Mining Company, and the completion of the sales of the Lynemouth Power Station and the Chinese portion of its Alcan Cable business.

All currency figures in this report are US dollars, and comments refer to Rio Tinto’s share of production, unless otherwise stated

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto’s business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.

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