Leaner green Rio quits coal

RIO Tinto has become the only major mining house not to dig up coal after selling out of its last Australian mine producing the black rock.

The Anglo-Australian mining titan has now netted almost $10 billion by exiting the coal sector in a string of deals.

It announced yesterday that it had agreed to sell its 80 per cent stake in the Kestrel underground coking and thermal coal mine in Queensland for $US2.25 billion ($2.92 billion).

The sale of Rio’s last coal asset had produced a “leaner and greener” miner, analysts said, and it was likely to use the proceeds to fund a fresh round of share buybacks.

The deal was announced little more than a week after Rio inked an agreement to sell its Hail Creek thermal and coking mine, also in Queensland, to Glencore for $US1.7 billion.

Coking coal is used in steel production while thermal coal, which has increasingly been targeted by environmental activists, is used mainly to generate power.

Rio sold its entire New South Wales operations for $US2.69 billion last year.

UBS analyst Glyn Lawcock said Rio was likely to launch a share buyback given it had indicated it was comfortable with its debt levels, did not plan to substantially raise capital expenditure and viewed potential acquisitions as too expensive at the moment.