News Wrap

IN THIS morning’s News Wrap: cost-cutting Rio looks at offloading coal sale; miners facing capital dilemma; and NSW government approval for uranium exploration a step closer.

Staff Reporter

Cost-cutting Rio looks at offloading coal sale

Eighteen months after taking full control of NSW miner Coal & Allied, Rio Tinto is soon to finalise the sale of a large minority stake – along with holdings in some of its Queensland coal mines – as it seeks to cut its level of debt, according to the Sydney Morning Herald.

The sale comes while Rio is looking to offload its Canadian iron ore assets and its Ashton diamond mine in the Kimberley region of Western Australia as it cuts capital spending after the elevation of former iron ore division boss Sam Walsh to chief executive.

His promotion followed heavy provisions taken against a poorly thought out acquisition of coal assets in Mozambique and after its disastrous acquisition of Alcan, the Canadian-based aluminium group.

Rio refused to comment on speculation yesterday of the looming deadline for bids for a 29 per cent stake in Coal & Allied, which operates a suite of coalmines in the Hunter Valley, along with its Clermont and Blair Athol mines in Queensland.

Miners facing capital dilemma

Mining companies are faced with increased capital risk – large miners from falling commodity prices and explorers from a lack of capital – exacerbated by an increased focus on short-term returns, according to the Sydney Morning Herald.

An Ernst & Young survey says capital allocation and access to capital are now ranked at the top of the risk list for miners globally, up from No.8 a year ago.

These “capital dilemmas” threaten the long-term growth prospects of the larger miners and the short-term survival of cash-strapped juniors, Mike Elliott, the group's global mining and metals head, said.

Margin protection and productivity improvement were ranked the second-highest risk, up from fourth a year ago, the survey found, with resource nationalism dropping back to the third-highest risk, down from the highest.

NSW government approval for uranium exploration a step closer

The NSW Minister for Resources and Energy, Chris Hartcher, is expected to give the go-ahead soon to several companies to begin exploring for uranium in far western NSW, according to The Australian.

Speaking at the AusIMM International Uranium Conference in Darwin, Hartcher announced that he expected to invite companies to apply for an exploration licence by early next month, and that exploration licenses will be granted by the end of the year.

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