Rio Tinto has agreed to offload a raft of Australian coal assets to Swiss-based commodities giant Glencore as it moves a step closer to a full exit from the industry.
The US$1.7 billion deal involves the sale of Rio's 82 percent stake in the Hail Creek mine and its 71 percent holding in the undeveloped Valeria project, both in Queensland state.
Chief executive Jean-Sebastien Jacques said the sale delivered value to the company's shareholders and fitted with the Anglo-Australian firm's strategy of strengthening its portfolio and focusing on high returns.
"We expect that Hail Creek will continue to perform strongly under its new owner, securing long-term jobs and continuing its contribution to the state of Queensland," he said in a statement late Tuesday.
The deal needs to be approved by the Foreign Investment Review Board, the Queensland government and foreign competition authorities.
Subject to regulatory approvals, the world's second largest miner expects the sale to be completed in the second half of 2018.
It follows Rio last year selling most of its other Australian coal assets to China-backed Yancoal, in a divestment drive analysts expect will lead to a complete exit from the sector.
The sale of Coal & Allied banked Rio $2.45 billion in cash with a further $240 million due in royalty payments, allowing it to return virtually all the money to shareholders in a share buyback.
The company is on a drive to free up $5.0 billion in additional cash flow from 2017 to 2021 and reducing debt with divestments is a key way of achieving this.
Rio said it was looking at selling its remaining coal assets in Queensland.
"There is a separate process underway to sell Rio Tinto's remaining Australian coal assets. Rio Tinto will update the market on this process as appropriate," it said.