By James Regan
SYDNEY (Reuters) - Global miner Rio Tinto (AX:RIO) (L:RIO) has opened its books to more than a half-dozen potential buyers of its remaining two Australian coal mines as it winds down the sales process, two people familiar with the sale process said on Friday.
The Kestrel and Hail Creek coking coal mines on the block have attracted some of Australia's established coal miners, as well as private equity firms attracted to the positive outlook for selling metallurgical coal to Asian steel mills at robust prices, according to the people.
The mines could fetch around $2 bln, the sources said, in a sale that if successful would complete Rio's plan to finalise its exit from the sector and focus on iron ore, copper and aluminium, where it maintains greater market share. Credit Suisse (SIX:CSGN) is advising Rio on the sale.
Rio this year sold its Coal & Allied mining division to Yancoal Australia (AX:YAL) for $2.69 billion, and before that its 40 percent interest in the Bengalla coal mine to New Hope Corp Ltd (AX:NHC) for $616.7 million.
Whitehaven Coal (AX:WHC), South32 (AX:S32) and possibly Anglo American (L:AAL), are among the interested parties, according to one of the people familiar with the process. Both sources spoke on condition of anonymity due to the sensitive nature of the process.
South32 in an email to Reuters declined to comment beyond saying the company continued "to focus on identifying new opportunities outside our portfolio to compete for capital".
Rio and Anglo American declined to comment. Whitehaven did not immediately respond to telephone and email requests for comment.
People familiar with the matter previously told Reuters investors including buyout firm Apollo and pension fund Canada Pension Plan (CPP) are among the bidders for the mines.
Parties have been invited to submit tentative offers by Dec. 8.
A sale would end Rio's exposure to coal and open the door to investment by large funds that do not buy stock in companies exploiting fossil fuels, such as Norway's $1 trillion wealth fund, according to UBS analyst Glyn Lawcock.
Rio in 2011 made a disastrous $3.7 billion investment to develop metallurgical coal assets in Mozambique and propel itself to the upper ranks of global suppliers, only to write off more than $3 billion on the deal two years later due to logistical problems. It was divested in 2014 for $50 million.
The U.S. Securities and Exchange Commission on Tuesday charged Rio and two former executives with fraud, saying they inflated the value of Mozambique coal assets and concealed critical information while tapping the market for billions of dollars. Rio and the two former executives deny the charges.
"Had the Mozambique strategy played out, they would be a significant player in the metallurgical coal market, and I think they would probably stay in the market," UBS analyst Lawcock said. "But to only have two small mines doesn't make a lot of sense."