Rio Tinto (NYSE: RIO ) is soon to divest a majority stake in its Cleremont thermal coal mine in Queensland, Australia. The company has signed a binding agreement to sell 50.1% of the mine to Glencore Xstrata and Sumitomo Group for $1.015 billion, Rio Tinto and Glencore Xstrata announced in separate press releases. The stake will be held by GS Coal, a 50/50 venture of the latter firm and Sumitomo. Following the consummation of the deal, Glencore Xstrata will become the managing entity of the facility.
For Rio Tinto, the sale is part of its rationalization efforts. In its press release, the company quoted CFO Chris Lynch as saying that the divestment "will allow us to realise value for our shareholders as we continue optimising our portfolio."
So far this year, the company has divested just over $2.9 billion in assets, it said.
These funds will help the firm pay down its high levels of indebtedness; at the end of its most recently reported quarter its long-term debt stood at $16.5 billion.
The sale of the Clermont stake is conditional on approval from Rio Tinto's partners in the mine, Mitsubishi Development, J-Power Australia, and J.C.D Australia. It is also subject to review by the relevant regulators. The deal is expected to close in Q1 2014.