SYDNEY May 5 The sale of two Rio Tinto
coking coal mines in Australia is attracting scores of
interested buyers as private equity and public companies compete
for a foothold in one of the year's hottest commodities, four
sources familiar with the matter said on Friday.
Rio Tinto is expected to soon begin an official sales
process for the Hail Creek and Kestrel mines in coal-rich
Queensland state, which is bringing "an unprecedented number of
people to the table," said one source, whose company is
interested in the assets.
Analysts expect each mine to sell for more than $2 billion
and complete Rio Tinto's exit from Australian coal mining after
it agreed in January to sell its Coal & Allied thermal coal
division to China's Yancoal for $2.45 billion.
"There's a lot of interest in a limited number of
opportunities in Australian coking coal and that's driving the
frenzy for Hail Creek and Kestrel," the source said, speaking on
condition of anonymity.
Rio Tinto has not formally announced the sale, but has said
it is exiting coal as its focuses on growth in iron ore, copper
and its aluminium division. The company declined to comment on
whether it was taking offers on the two Australian mines.
Australian coking coal is sold mostly to steel mills in
Asia. Prices jumped to half-decade highs late last year
on pinched supplies in China and surged again last month after
an Australian cyclone disrupted shipments, underscoring the
strong demand for high quality coal.
A private equity executive, who has previously bought
Australian coal assets, said he expected to face "stiff
competition" from other private equity groups for the Rio Tinto
Credit Suisse is advising Rio Tinto, a third source said.
Credit Suisse declined to comment.
Buyers are also looking at mines put up for sale by other
companies, including conglomerate Wesfarmers, and
Peabody Energy. Anglo American also said a
year-and-a-half ago it would exit coal mining as part of a
restructuring to pay off debt, but has yet to announce a formal
sale since coal prices staged a recovery.
Barry Tudor, a fomer mining chief executive and head of
private equity group Pembroke Resources, said the recovery in
prices had removed the urgency of a sale for some companies,
with mine owners happy to run their operations for cash.
Pembroke last year ago paid A$104 million for three mine
tenements from Peabody and was looking for more mines to feed
long-term demand from Asia.
"We now have a mandate to specifically find more coking coal
assets in Australia," said Tudor, although he declined to
comment on whether Pembroke would look at the two Rio mines.
(Reporting by James Regan; Editing by Richard Pullin)