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Rio Tinto (NYSE:RIO) agrees to sell its Mozambique coal assets to an Indian investment group for $50M, marking the end of one of its costliest deals during the commodities boom.
Rio acquired the coal business in 2011 through its $3.7B takeover of Riversdale Mining as coal prices were surging on rising demand from Asia and supply disruptions in major coal-producing countries, but it has since written down the assets by ~$3.5B, as it became clear that extracting and transporting the coal from the Moatize Basin was more challenging than previously thought.
If $50M seems like a fire sale price, Citigroup analysts had placed a negative value of $373M on the assets, and sees the sale as “a small but accretive deal that cleans up the legacy portfolio.”