MAPUTO — Global mining giant Rio Tinto announced a deal on Wednesday to sell its coal mine and linked projects in Mozambique for $50m, after writing down their value by $3bn last year.
"Rio Tinto has reached an agreement to sell Rio Tinto Coal Mozambique, which comprises the Benga coal mine and other projects in the Tete province of Mozambique," the company said in a statement.
The announcement came just two years after the Anglo-Australian company exported its first coal from the southern African country, which has seen a return to sporadic fighting following 20 years of post-civil war peace.
A consortium of Indian state-run companies — International Coal Ventures — would take over the mines, and the deal would be finalised in the third quarter of this year.
The consortium reportedly already showed interest in buying the mine when Rio Tinto acquired it in 2011 for almost $4bn.
Mozambique’s government deplored Rio Tinto’s devaluation of its assets in January last year, which also cost CE Tom Albanese his job.
At the time, Rio Tinto cited problems transporting the coal over 600km from northwestern Mozambique to the sea for its decision.
It shares a single railway line with Brazil’s Vale and hopes of using the Zambezi River to barge coal to the coast were dashed in 2012 when the government refused the plan on environmental grounds.
Meanwhile, Vale is upgrading and building another railway line that will cut through Malawi to the Nacala deep water port.
Rio Tinto’s withdrawal started last year when the families of foreign employees were evacuated amid a spate of ransom kidnappings in the capital Maputo and skirmishes between government forces and Renamo rebels.
Renamo, the official opposition, took up arms again after its leader Afonso Dhlakama returned to the bush in 2012, accusing the government of reneging on a 1992 peace agreement.
In June last year Rio Tinto temporarily halted exports after Renamo threatened to block the railway in the centre of the country.
The Frelimo-led government has had months of stop-start peace negotiations with Renamo and both parties noted "advancements" in talks on Monday.
Coal was previously heralded as a boon for the economy that was almost destroyed by the 16-year civil war.
But Mozambique’s attention has recently shifted to vast natural gas reserves discovered off the northern coast.