Rio cutting Mozambique coal: report

RIO Tinto is reportedly preparing for the sale of its Mozambique coal unit following a series of problems in the region.
Rio cutting Mozambique coal: report Rio cutting Mozambique coal: report Rio cutting Mozambique coal: report Rio cutting Mozambique coal: report Rio cutting Mozambique coal: report

 

Staff Reporter

The mining giant is in talks with several investment banks as it looks to secure a financial advisor to guide either a whole or partial sale of the operations,The Wall Street Journal reports.

The paper quoted a source as saying the entire coal unit could be sold for more than $700 million, while a minority sale would help ease the mining giant's capital expenditure burden.

Rio has had a turbulent relationship with the east African nation after announcing a $3 billion write-down on its $4b Riversdale acquisition, less than two years after it was completed.

After the January announcement, Rio Tinto chairman Jan du Plessis said: “In Mozambique, the development of infrastructure to support the coal assets is more challenging than Rio Tinto originally anticipated.”

The company’s endeavors in the country’s coal-rich Tete province have been plagued with issues, including last week’s derailment of a loaded train, flooding that resulted in an enduring force majeure in February, and ongoing political unrest and guerilla attacks.

Rio is not the only major suffering in the region.

Anglo American recently announced it had decided not to proceed with a $555 million acquisition of a metallurgical coal project in Tete, while Vale called a force majeure on its exports after the flooding of the recently upgraded Sena line, the only railway linking the coal-rich Moatize basin with the Beira port.

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