$4BN BUST: Another Terrible Mining Boom-Time Decision Has Come Home To Roost At Rio

Former Rio Tinto CEO Tom Albanese was shunted from the top job last year, shortly after the miner changed tack and executed a new cost-out strategy.

Rio Tinto has just sold its troubled Mozambique coking coal assets for $US50 million, taking a big hit after paying $4 billion to acquire the Riversdale Mining operation in 2011.

The assets took a $3 billion bath in 2013 and played a role in the then Rio Tinto CEO Tom Albanese’s departure.

On Wednesday the company confirmed it had reached an agreement to sell Rio Tinto Coal Mozambique to Indian-based International Coal Ventures Private Limited.

IVCL was set up as a government-backed joint venture with the purpose of buying up international coal assets.

The sale is subject to regulatory approvals but Rio expects it will close in the third quarter of this year.

But it’s another boom-time decision which won’t be forgotten too quickly.

The other one was Rio’s Alcan deal.

Former CEO Albanese was also at the helm when Rio launched a big aluminium play, out-bidding Alcoa by $10 billion to purchase Alcan for $US38 billion which also caused bottom line trouble.

The deal stretched the company’s debt levels and it was done at the top of the aluminium market.

When Albanese resigned in January 2013, the writedowns handing over the Alcan acquisition had reached about $25 billion.

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