MARKETS

Peabody goes to Rio

IN December, 71% Rio Tinto subsidiary Coal & Allied Industries purchased US group Peabody’s Australian coal assets for $1.85 billion (US$1.03 billion).

Staff Reporter

Peabody sold interests in five coal mines producing about 20 million tonnes of coal. The open-pit coal mines in Queensland and New South Wales include the 5.5Mtpa Moura mine in Queensland, the 5.6Mtpa Bengalla mine in NSW, and the 4Mtpa Ravensworth and Ravensworth East mines in NSW.

The deal makes Rio the largest exporter of coal from New South Wales, with 36Mt of production. Including Pacific Coal, Rio's Queensland operation, the group will have annual production of more than 55Mt.

Coal & Allied already operates three mines in the Hunter Valley, and Rio is set to cut costs by integrating the Peabody mines with its own.

"With managed production of about 36Mt, we will become a much bigger and stronger company which will be able to compete aggressively on world coal markets," said Coal & Allied's managing director Dr Kim Tronson.

The deal which included an 80% share in the Moura mine generated concern from Queensland Mines Minister Tony McGrady expressed concerned at suggestions the sale could jeopardise the future of the mine. Rio Tinto subsequently assured the Queensland Government that it had no plans to close Moura.

Observers suggest that the continuing consolidation of Australia’s coal industry is likely to cause anxiety among Japanese buyers, who are losing the ability to play price talks off against coal producers. The dominance of Rio in the NSW Hunter Valley region, a key source of thermal coal for Japanese power utilities, has already begun to impact on coal price talks.

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production

editions

Mining Magazine Intelligence Automation Report 2023

An in-depth review of operations using autonomous solutions in every region and sector, including analysis of the factors driving investment decisions

editions

Mining Magazine Intelligence Exploration Report 2023 (feat. Opaxe data)

A comprehensive review of current exploration rates, trending exploration technologies, a ranking of top drill intercepts and a catalogue of 2022 Initial Resource Estimates and recent discovery successes.