Last week ILN column Hogsback postulated that the global resources giant was under growing pressure to sell the Coal and Allied-managed mines at Bengalla, Hunter Valley Operations and Mount Thorley Warkworth to resolve its corporate debt crisis.
Yesterday a spokesperson for the company would not reply to questions on the matter put to it by ILN.
“We’re not going to comment on speculation,” the spokesperson said.
Standard & Poor’s has downgraded its outlook for Rio Tinto to negative on concerns over its high debt levels, which may force the miner into major asset sales.
Former chief executive Tom Albanese was forced to quit as he announced $US14 billion in write-downs which included the company’s troubled Mozambique coal mining assets.
Newly appointed Rio Tinto energy head Harry Kenyon-Slaney is running a ruler over the company’s Australian coal operations from its Brisbane office and is expected to cut contractor and staff numbers for any mine that goes cashflow negative.
Kenyon-Slaney has also been given open slather to cut 15% from the operating cost base of Rio’s Australian operations over the next two years through smarter procurement, including a renewed push into emerging markets for sourcing goods and services.
RTCA revenue dropped by 15% to $4.9 billion for 2012 while net earnings plunged by more than 60% to $402 million in a horror year for its Queensland and NSW coal operations, which include Coal and Allied.
At the same time capital expenditure ballooned by 50% to $1.5 billion for the coal division as it remained committed to its investment in the Kestrel longwall mine extension and expansion in Queensland.
A longwall changeover, adverse weather conditions and commissioning delays of a coal handling and process plant in the December quarter impacted coal sales from Kestrel but the extension remained on track to come onstream in the second quarter of 2013.
When the extension is complete, capacity will increase to up to 7 million tonnes per annum with an average of 5.7Mtpa of saleable coal expected over the extended 20-year life of the mine.
