Global mining and metals company Rio Tinto has reached a binding agreement for the sale of its fully-owned Australian subsidiary Coal & Allied Industries to Yancoal Australia, a 78%-owned subsidiary of Chinese coal company Yanzhou Coal Mining. The $2.45bn transaction will include an initial $1.95bn cash payment, payable at completion, and $500m in aggregate deferred cash payments, payable as annual instalments of $100 million over five years following completion. The transaction is expected to be completed in the second half of 2017, subject to the approvals from the Australian Government, Chinese regulatory agencies and the NSW Government. After the transaction completion, Rio Tinto will also be entitled to potential royalties.
Coal & Allied operates multiple, multi-seam open cut mines in the Hunter Valley region of New South Wales. It holds a 67.6% stake in the Hunter Valley Operations mine, an 80% interest in the Mount Thorley mine, a 55.6% interest in the Warkworth mine, a 36.5% interest in Port Waratah Coal Services (which owns a coal export terminal located at the Port of Newcastle) and other undeveloped coal assets. The Hunter Valley Operations and Mount Thorley Warkworth mines together produced 25.9 Mt of saleable thermal and semi-soft coking coal in 2016 (17.1 Mt Rio Tinto share).