Bil­lion­aire Salim to buy Rio’s coal as­sets

The Pak Banker - - COMPANIES/BOSS -

A com­pany run by In­done­sian bil­lion­aire An­thoni Salim agreed to buy Aus­tralian coal as­sets from Rio Tinto Group for $224 mil­lion, ex­pand­ing in an in­dus­try suf­fer­ing from a global glut and plung­ing prices.

The sale of the Mount Pleas­ant coal pro­ject in New South Wales to MACH En­ergy Aus­tralia Pty also in­cludes po­ten­tial roy­al­ties in the fu­ture, Rio said on Wed­nes­day. The deal fol­lows Rio's agree­ment last year to sell a stake in the Ben­galla coal ven­ture in Aus­tralia to New Hope Corp. for $606 mil­lion and brings its as­set sales to $4.7 bil­lion over the past three years.

Salim's com­pany is buy­ing the coal op­er­a­tions as prices lan­guish at the low­est lev­els since 2006 and de­mand slows in China, the big­gest con­sumer. The price of ther­mal coal at Aus­tralia's port of New­cas­tle has tum­bled to about $48 a met­ric ton af­ter five years of de­clines, ac­cord­ing to data from Glob­al­coal.

MACH "must be of the view that de­mand is go­ing to grow," Mathew Hodge, a Syd­ney-based an­a­lyst at Morn­ingstar Inc., said by phone. "You're go­ing to be wait­ing for a long time" for coal in­vest­ments to pay off, he said. In­vestors, pol­icy mak­ers and pro­duc­ers are weigh­ing the fu­ture of coal and con­sid­er­ing the prospect that un­de­vel­oped de­posits may be­come stranded as­sets as na­tions take steps to re­duce their green­house-gas emis­sions.

De­spite the tra­vails of the sec­tor, Aus­tralia is fore­cast to over­take In­done­sia and re­gain its po­si­tion as the world's largest coal ex­porter, ac­cord­ing to the In­ter­na­tional En­ergy Agency. In­dia, Malaysia and Viet­nam may help drive de­mand for Aus­tralian coal, con­sult­ing firm CRU Group said ear­lier this month.

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