Mining giant Rio Tinto (ASX, LON:RIO) has in Australia to private equity manager EMR Capital and Indonesian coal company Adaro Energy, in a deal worth $2.25 billion.
The transaction makes of Rio Tinto the first major miner to exit the coal industry, and comes only a week after it announced the $1.7 billion-sale of its , as well as an undeveloped for $200 million.
The sale of its 80% stake in Kestrel brings the total amount Rio Tinto has collected with the latest three coal sales to $4.15 billion, which it said would be used for 鈥済eneral corporate purposes.鈥�
According to analysts at Wood Mackenzie, it could also unlock potential coal output that would have likely been delayed under Rio Tinto鈥檚 ownership given competing portfolio interests, the said in a note Wednesday.
The sale of its 80% stake in Kestrel brings the total amount Rio Tinto has collected with the latest three coal sales to $4.15bn.
鈥淚 would like to thank the many people at Rio Tinto and the communities where we operate, whose hard work and commitment has contributed to the success of the coal business over many years,鈥� chief executive Jean-S茅bastien Jacques聽.
Since announcing the company鈥檚 decision to exit the coal sector last year, the executive has repeatedly said that Rio was not turning its back to coal because of environmental concerns, but because it had better investment opportunities in iron ore, copper, aluminum and bauxite. Indirectly, however, the company still has some ties to coal, as it鈥檚 planning to copper and gold mine in Mongolia.
Under his direction, the company has focused on cutting costs, generating cash and returning as much of it as possible to investors through dividends and share buybacks.
The strategy helped Jacques announce last month a . It was his first annual report as Rio鈥檚 CEO, as he only 聽in July 2016.
Cloud on the horizon
Despite the financial success, the miner is facing hard times as is still battling reputational damage聽brought by a series of incidents, including a聽聽made to an external consultant聽over the Simandou iron ore project in Guinea.
It is also facing fraud聽, the country鈥檚 top securities regulator, related to the miner鈥檚 and two former executive鈥檚 alleged covered-up of multi-billion-dollar losses on a coal investment in Mozambique, allegations which the two men and the company deny.
Rio has also been recently accused of聽聽at its massive Oyu Tolgoi copper and gold mine in Mongolia.
The company聽said the Kestrel deal was聽subject to regulatory approvals and was expected to be completed in the second half of 2018.