Miner plans £2bn coal mines sale in Australia

RIO Tinto is selling most of its coal mining business in Australia to a Chinese group.

Yancoal Australia is buying the mining giant’s Coal & Allied Industries for £2bn – an initial £1.6bn then five annual payments of £80m. Rio will also be entitled to potential royalties after the sale.

The deal is subject to Australian government approval, and could meet resistance amid a sweeping review of foreign takeovers Down Under.

The Australian government has begun listing key assets to see if privatisation or sale to foreign investors would be a national security risk.

It has set up a Critical Infrastructure Centre to assess risks and help prevent sabotage.

Last year it prevented Hong Kong and Chinese firms from taking over Ausgrid, the power grid in New South Wales, on national security grounds.

Yancoal is already one of Australia’s largest coal miners, producing around 15.5m tonnes of coal and operating across four or five sites. The Yanzhou Coal Mining Co of China, which is controlled by a Chinese state-controlled group, owns a 78pc stake.

Rio’s Coal & Allied has been up for sale for at least a year, and it is thought the price is ahead of market expectations.

Coal & Allied owns and operates mines in New South Wales that produced 25.9m tonnes of coal last year.

Rio said it had ‘extensive discussions’ with other potential buyers, but that Yancoal was the only one to offer ‘compelling value’.