Rio Tinto buys coal mine

Rio Tinto (RTP-N) has agreed to buy an 80% stake in an Australian coal mine from Atlantic Richfield for US$150 million.

Rio’s operating subsidiary, Pacific Coal, expects to reopen the Gordonstone mine in the new year. The underground operation is situated in Queensland, as are two other Pacific Coal producers — the Blair Athol and Tarong mines.

Gordonstone is capable of producing 5 million tonnes of high-quality coking coal and high-energy thermal coal for export markets in Asia and Europe. The property consists of 190 million tonnes of reserves within a resource of 289 million tonnes. The acquisition includes the nearby Gordonstone West property, which contains an additional 126 million tonnes of reserves.

Pacific Coal’s annual coal production is expected to grow to 26 million from 16 million tonnes as a result of the acquisition of Gordonstone and the development of the Hail Creek mine.

The transaction is expected to be completed by year-end. The remaining interests in Gordonstone are held by Mitsui of Japan, at 15%, and MLC of Australia, at 5%.

The mine initiated production in September 1992, and produced 4.6 million tonnes in 1996, its last full year of production.