CANBERRA: Global miner Rio Tinto has cut a deal to sell its Australian coal assets to China’s Yancoal for $3.2 billion — if the sale is approved by the Federal Government. The $US2.45 billion ($3.2 billion) sale of Coal & Allied includes Rio Tinto’s largest Australian coal operation, located in the Hunter Valley.
Yancoal Australia is owned by Chinese company Yanzhou Coal Mining. The coal properties that would end up majority-owned by the Chinese company are Mount Thorley, Warkworth and Hunter Valley Operations, as well as a stake in Newcastle’s Port Waratah coal loaders. The deal is still subject to approvals from the Australian Government, Chinese regulatory agencies, and shareholder approval. The Government tightened the laws around foreign investment last year after the Northern Territory Government controversially leased out the Port of Darwin for 99 years to a Chinese-owned company. Now critical assets worth more than $250 million need to be approved by the Foreign Investment Review Board (FIRB).
Treasurer Scott Morrison’s office would not say if an application for the deal is before the board yet. “The Treasurer will consider a wide range of issues in any decision-making regarding foreign investment review decisions,” a spokesman for Mr Morrison said. Mining analyst Giuliano Sala Tenna from Bell Potter Securities believes the FIRB is likely to approve the deal. “It’s always going to be a risk but it’d be difficult for the regulators to step in this instance because if they step in then really it’s saying to the big miners that they could potentially step in on other transactions of this nature,” he said. “I think with companies when you ask them to commit large sums of capital for long life projects they also have to have the flexibility to monetise their equity holdings if their corporate strategy changes.” Rio Tinto’s share price has already jumped on the back of the announcement.
