Swiss commodities giant Glencore (LSE:GLEN) is on track to sell a second coal mine in Australia this year.
The company said on Monday (August 28) that it is looking to review its portfolio and target other opportunities. It is ready to start the sales process for its Rolleston mine in Queensland, together with its Japanese joint venture partners, Itochu (TSE:8001) and Sumitomo (TSE:8053).
“The Rolleston mine is a high-quality asset that offers potential buyers the opportunity to gain a strong foothold, or significantly increase their current position, in the Australian and Queensland coal industry,” the diversified miner said.
In 2016, Rolleston produced 13.3 million tonnes of thermal coal, which is used for making electricity. In total, Glencore’s Australian operations produced about 93 million tonnes of coal last year.
“We will only sell the Rolleston mine if we consider that an offer delivers value for our shareholders. It will be business as usual at the mine as we work through the sale process,” Glencore added.
The company didn’t say how much it hopes to sell Rollestone for, but did note that the asset has become geographically stranded due to its distance from its other coal operations in the area.
“This decision is part of Glencore’s ongoing programme to optimise its portfolio and redeploy capital into other opportunities,” the company added. In May, the company began a similar process for its Tahmoor underground coking coal mine in New South Wales.
Despite its decision to sell Rolleston, Glencore is still interested in thermal coal. Last month, the company agreed to pay $1.1 billion for a 49-percent stake in the operations that Yancoal (ASX:YAL) is buying from Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO). That will add 7 million tonnes of thermal coal a year to Glencore’s coal division.
“Thermal coal prices in excess of $100 a tonne on the back of strong demand from the Asian market has seen the industry gain momentum,” said CLSA mining analyst Andrew Driscoll.
On Monday, Glencore’s share price fell 0.25 percent to close at GBX 353.32 in London.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.