Rio Tinto Sells Wharf and Land to LNG Canada

International mega miner Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) has finalized the sale and lease of a wharf and land in British Columbia to Canadian joint venture LNG Canada.

Rio Tinto had entered into an option agreement with the energy producer in 2014 for a number of options related to the lease and purchase of the wharf and parcels of land.

“This sale demonstrates our ability to generate cash from an existing asset, without losing future cash flow, as we continue to drive value across our entire portfolio,” Rio Tinto’s Chief Financial Officer Jakob Stausholm said in the press release.

For its part, LNG Canada has agreed to pay the Australian miner US$576 million for the dock and property.

The North American conglomerate of energy companies that is LNG Canada is comprised of Shell (AMS:RDSA,NYSE:RDS.B), Petronas (KLSE:PETGAS), PetroChina (SHA:601857), Mitsubishi (TSE:8058) and Korea Gas (KRX:036460).

As part of the finalized agreement, LNG Canada will construct a replacement wharf for Rio Tinto, in order for the company to export its shipments of aluminum from the BC Works smelter.

This latest news, follows last month’s announcement from LNG Canada, that it planned to move ahead with the building an export facility in Kitmat, British Columbia.

The joint project will be LNG Canada’s first large scale export facility in Canada, and a major milestone for the country.

“Today’s announcement by LNG Canada represents the single largest private sector investment project in Canadian history,” the Prime Minister of Canada, Justin Trudeau, said at the time.

“It is a vote of confidence in a country that recognizes the need to develop our energy in a way that takes the environment into account, and that works in meaningful partnership with Indigenous communities.”

The project will also be unique in that each participating company in the joint venture will be expected to provide its own natural gas supply and will be in charge of how it markets its share of the resource.

Taking the environment into consideration, LNG Canada’s export plant will be specially designed to achieve the lowest carbon intensity of any large-scale LNG plant operating in the world today.

The company plans to realize this through the use of renewable hydropower from BC Hydro and highly-efficient gas turbine engines. The plant will also be constructed on a partially developed industrial site with deep water ports and access to roads, rail and power supplies.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.