Rio Tinto Exits Mozambique Coal Venture after $3bn Writedown

Anglo-Australian mining firm Rio Tinto will sell its Mozambique coal assets, purchased through the near $4bn acquisition of Riversdale Mining in 2011, for just $50m to an Indian investment group.

The sale of Rio Tinto Coal Mozambique to International Coal Ventures (ICVL) includes the Benga coal mine and other projects in the Tete province.

Rio Tinto's other assets in Mozambique remain unaffected by the transaction, the London-based firm said in a statement.

The sale is subject to 'certain conditions precedent and regulatory approvals. The transaction is expected to close in the third quarter of 2014', the statement added.

Rio Tinto's stock was trading 0.58% lower to 3,455 pence at 1409 BST in London, after shedding 0.70% to 3,450 pence in early trading. The stock has gained 1.33% so far this year.

ICVL

The deal, for Rio's Mozambique coal unit, marks ICVL's first acquisition.

The Indian firm, formed to buy coking coal mines abroad, is backed by investments from Coal India, steelmakers Steel Authority of India (SAIL) and Rashtriya Ispat Nigam, iron ore producer NMDC and power generator NTPC.

Nomura analysts said: "The sale is not overly surprising given the new management team has little interest in major greenfield projects where they don't have much experience and coal in general has also fallen out of favour."

Mozambique Hit

Rio Tinto's move will slow down the Southeast African nation's attempts to become a major coal exporter.

Rival miner Vale is also looking to sell a stake in its Mozambique coal assets which includes its Moatize mine.

In an interview over the weekend, Mozambique's transport minister Gabriel Muthisse, said the government remained committed to developing the coal industry as an economic growth driver, Reuters reported.

In January 2013, Rio Tinto marked down its coal operations in Mozambique by $3bn (£1.8bn, €2.2bn), partly owing to a failure to obtain a permit to ship coal by barge down Mozambique's Zambezi River.