Rio Tinto has sold its Queensland coal mine for $2.2 billion

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Rio Tinto has sold its interests in the Hail Creek coal mine and the Valeria coal development project in Queensland for $US1.7 billion ($AU2.2 billion).

The sale to Glencore includes Rio Tinto’s 82% interest in the large-scale Hail Creek mine near Mackay and its 71.2% interest in the Valeria project, a thermal coal deposit west of Rockhampton.

Global mining giant Glencore already has 17 operational mines in Queensland and New South Wales, producing more than 87 million tonnes of coal.

The remaining 18% of Hail Creek is owned by Nippon Steel Australia (8%), Marubeni Coal Pty Ltd and Sumisho Coal Development (3.33%).

“The sale of Hail Creek and Valeria delivers compelling value for our shareholders and continues our strategy of strengthening our portfolio, focusing on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities,” says Rio chief executive J-S Jacques.

The deal is subject to regulatory approvals from the Foreign Investment and Review Board and the Queensland Government.

Rio is working on the sale of remaining Australian coal assets.

The company last month announced cash returns to shareholders of $US9.7 billion ($AU12.4 billion) for the full year, including its biggest full year dividend of $US5.2 billion ($AU6.7 billion), at 290 US cents a share, and an additional share buy-back of $US1 billion added to previously announced buy-backs of $US3.5 billion ($AU4.5billion).

Underlying earnings for the year to December were up 69% to $US8.6 billion ($AU11 billion).