Rio eats humble pie over coal assets
Rio Tinto has sold its overrated Mozambique coal assets for only a fraction of the $US4 billion the mining giant paid for them back in 2011.
Rio secured the assets in a top-of-the-market takeover of Riversdale Mining.
The ill-conceived acquisition would later spell the end of the then chief executive Tom Albanese, who was the brains behind the takeover.
Rio Tinto announced today it had sold Rio Tinto Coal Mozambique assets, which comprises the Benga coal mine and other projects in the Tete province of Mozambique, to International Coal Ventures Private Limited for just $US50 million.
The sale is subject to conditions and regulatory approvals but is expected to settle this quarter.
Sam Walsh replaced Mr Albanese as Rio's chief executive early last year after the company was forced to writedown the value of its aluminium and coal assets by $US14 billion.
The multi-billion-dollar mistake to buy a coal project in Mozambique was deemed unacceptable by the mining giant's board following the company's disastrous 2007 $US38b Alcan deal.
The quality of the coal in Mozambique was not as good as had been expected, making the expensive construction of a railway line uncommercial.
Rio shares closed up 32 cents at $66.07.
