Rio Tinto sells coal mine for A$1 as industry struggles

4th Jul 2016 15:08

(ShareCast News) - Mining giant Rio Tinto sold its interest in a coal mine in Australia for A$1 as the commodity market continues to struggle.The mine was sold for less than the price of a cup of coffee, the Financial Times reported on Monday.Rio Tinto's new chief executive said he wants to grow the company by building and buying assets and expanding its net for commodities for the company to grow.The minerals industry is seeing a downturn in world commodity markets which has extended into its fifth year. Thermal coal prices have fallen from about $180 per tonne in 2008 to just over $50 due to overproduction and a drop in demand from China.The Anglo-Australian mining company said it was in negotiations with Terracom, a smaller mining company, over its joint venture in Blair Athol thermal coal mine in Queensland. In 2012 Rio Tinto shut down the mine as coal prices fell.The company also relinquished its stake in a Papua New Guinea copper mine last week."We know that we need to grow. The growth strategy of Rio going forward will be: Build and buy smart," said new chief executive Jean-Sébastien Jacques to the Wall Street Journal."It is not about commodities, it is about the quality of the assets. We will grow our position in world-class assets no matter which commodities they are in.""Most of the commodities in which we operate today are suffering from overcapacity and the pace of the restructuring in China will have a critical impact on the pace of the price recovery."Two weeks ago Jacques reshuffled operations at Rio Tinto as head of iron ore Andrew Harding left, who was initially tipped to be chief executive. Sam Walsh succeeded Harding, who gained a reputation for cutting costs and investments at Rio Tinto over the past three years.Jacques grouped coal, titanium-dioxide commodities and the company's Canadian iron ore operation into one division run by Andrew Davies called energy and minerals.Jacques' method is different to rival mineral companies who have instead refocused on fewer assets.Last year Anglo-Australian mining company BHP Billiton sold mine pits and smelters from Australia to Africa to focus on four commodities. In April Anglo American sold its 70% stake in Foxleigh coking coal mine to Taurus Funds Management.Shares in Rio Tinto were up 0.79% to 2,363p at 1600 BST.