Rio Tinto Coal Mozambique denies possible sale of mining assets in the country

25 January 2013

Rio Tinto Coal Mozambique, a subsidiary of Anglo-Australian group Rio Tinto, has denied rumours that it is analysing the partial or total sale of the Benga mine in Mozambique’s Tete province, according to Mozambican daily newspaper Notícias.

A source from the company cited by the newspaper said that there were no plans for either a partial or total sale of the company’s assets. The source noted that the company was currently discussing the best way of developing those assets.

Last Tuesday international news agencies such as Bloomberg cited a group source in London as saying that Rio Tinto was valuing it coal mining operation in Mozambique, “and all options are being considered,” including the total or partial sale of the assets, following a write-down of US$3 billion that led to the group firing its chief executive.

According to the Financial Times, in its Tuesday edition, Rio Tinto may alternatively partner with competing mining companies operating in Tete province, such as Brazil’s Vale, to build and use railway facilities.

The group announced last week that its financial statement contained a write down of US$3 billion related to its Mozambique project due to an overestimate of coal reserves at Benga, in Tete province, and a lack of transport capacity in the country.

The proposal put forward by the group to transport coal along the Zambezi River was rejected by the Mozambican government and the Sena railroad, which links Tete to the port of Beira does not enough capacity to carry all the coal produced.

Due to total write-downs of US$14 billion, US$3 billion of which related to Mozambique and the remaining US$11 billion to aluminium production operations in Canada, the group fired its chief executive, American Tom Albanese, who was replaced by Australian Sam Walsh. (macauhub)