EMR Capital, Adaro agree $2.25b deal for Rio Tinto mine
Natural resources-focused GP EMR Capital and Indonesian energy firm Adaro Energy have agreed to buy an Australia coal mine owned by mining company Rio Tinto for $2.25 billion.
EMR and Adaro will acquire Rio Tinto’s 80% interest in the Kestrel facility in Queensland, according to a release. Further details on the size of each party’s stake have not been disclosed. The deal is expected to close in the second half of 2018, subject to regulatory approval.
Kestrel produces high-quality coking coal for use in steelmaking as well as thermal coal, and will be jointly managed by EMR and Adaro. It marks EMR’s biggest mining investment and Adaro’s largest commitment outside of Indonesia. The investors believe demand for coking coal is likely to rise in coming years due to ongoing growth in the global steel industry.
The sale of Kestrel is Rio Tinto’s third coal asset divestment this month. Rio Tinto CEO J.S. Jacques said the transaction “delivers exceptional value to our shareholders and will leave our portfolio stronger and more focused on delivering the highest returns through targeted allocation of capital.”
EMR is currently investing its second fund, which closed in 2016 at $860 million. The firm seeks controlling stakes in companies focused on copper, gold, coking coal and potash, expecting demand for each to continue growing – particularly from emerging markets such as China, India and Brazil. Other investments from the fund include the Golden Grove mine in Western Australia, purchased from China Minmetals Group last year for $210 million.
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