Rio gets Jacobs Ranch cash

ARCH Coal has completed its $US764 million ($A869.14 million) purchase of Rio Tinto’s Jacobs Ranch mining complex in Wyoming’s Powder River Basin.
Rio gets Jacobs Ranch cash Rio gets Jacobs Ranch cash Rio gets Jacobs Ranch cash Rio gets Jacobs Ranch cash Rio gets Jacobs Ranch cash

Jacobs Ranch Mine. Courtesy Rio Tinto Energy America.

Blair Price

The Jacobs Ranch open cut thermal coal operation produced 42.1 million tons last year.

"We are enthusiastic about completing the acquisition of Jacobs Ranch," Arch chairman and chief executive officer Steven F Leer said.

"This transaction further expands Arch's size, scale and strategic position in the Powder River Basin – the largest, fastest growing and most cost-competitive coal supply region in the nation.

“Arch plans to integrate Jacobs Ranch – which is the third-largest coal mine in the United States based on 2008 production – into the company's existing Black Thunder mine, creating what we believe will be the largest single coal mining complex in the world."

The transaction gives Arch 381Mt of coal reserves that are contiguous to Black Thunder.

Once Jacobs Ranch is integrated with the impressive sounding mine, Arch said the combined operation would have six draglines, 22 shovels, more than 130 haul trucks, three rail loadouts and 20 train landing spots.

Coal reserves for the combined operation are estimated to be 1.6 billion tons with output capacity of more than 140Mt per annum if required.

Arch is expecting synergies of $US45-55 million to flow from combining the two operations, which will employ 1700 people, 115 fewer than before the initial announcement of the deal back in March.

The final price is $3 million higher than first announced, with Rio saying this was due to slight adjustments in the closing working capital balance.

Rio planned the sale of Jacobs Ranch as part of a $7 billion asset sale program to reduce debt, with a binding $2.025 billion offer from Amcor struck in August for Alcan Packaging.

Shares in Rio have closed down A34c to $59.90 today.

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