Rio Tinto to Sell Jacobs Ranch Coal Mine
03/10/2009 - Rio Tinto signs sale and purchase agreement to sell its Jacobs Ranch coal mine to Arch Coal for a total cash consideration of US$761 million.
Rio Tinto has signed a sale and purchase agreement to sell its Jacobs Ranch coal mine to Arch Coal, Inc. for a total cash consideration of US$761 million. Wyoming-based Jacobs Ranch mines steam coal and ships it to customers throughout the United States.
"The sale of Jacobs Ranch is a further illustration of the high quality of our assets and the strong value we are able to obtain for shareholders," said Guy Elliott, Rio Tinto’s Chief Financial Officer. "This brings the total asset sales announced this year to US$2.5 billion."
Rio Tinto identified its Rio Tinto Energy America (RTEA) business unit for divestment in November 2007. RTEA operates U.S. coal mines mainly in the Powder River Basin of Wyoming and Montana, including Jacobs Ranch.
Rio Tinto’s divestment of RTEA, which will remain one of the largest coal producers in the U.S. following this transaction, will continue. During 2008, Rio Tinto realized almost US$3 billion from asset sales, comprising the Greens Creek mine in Alaska for US$750 million, its interest in the Cortez operation in Nevada for US$1.695 billion and the Kintyre uranium project in Western Australia for US$495 million. In January 2009, the Group announced the divestment of its interest in the Ningxia aluminum smelter in China for US$125 million as well as its potash assets and Brazilian iron ore operation for US$1.6 billion.
Credit Suisse advised Rio Tinto on the transaction, which remains subject to customary closing conditions, including regulatory approvals.
Located approximately 55 miles south of Gillette, Wyo., Jacobs Ranch Mine extracts steam coal from the Wyodak Seams, using dragline and truck-and-shovel methods. Two products are produced from the Jacobs Ranch mine with varying sulfur content. The mine shipped 42.1 million tons of coal in 2008 with an estimated average as delivered heat value of approximately 8800 Btu, ash content of 5.4%, and sulfur content of 0.45% (1.0 lbs SO2/mmBtu). Jacobs Ranch had approximately 381 million tons of proven and probable reserves at December 31, 2008.
Rio Tinto, a leading international mining group headquartered in the U.K., combines Rio Tinto plc and Rio Tinto Limited. Rio Tinto's business is finding, mining, and processing mineral resources, with activities that are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.
St. Louis-based Arch Coal is one of the largest coal producers in the United States. Arch focuses on high-quality, low-sulfur thermal coal deposits and supplies coal from 11 mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky, and Virginia prior to this acquisition.
