Rio Tinto Details US$3.2-billion Share Buyback Program

International mining giant Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) has unveiled the details of its US$3.2-billion share buyback program.

The investor cash windfall is courtesy of strategic post-tax coal disposal proceeds.

The diversified global miner plans to return the proceeds through a robust buyback program which combines an off-market buyback tender targeting up to 41.2 million Rio Tinto limited shares worth US$1.9 billion, and on-market purchases of Rio Tinto plc shares.

The multibillion disposal proceeds were generated from the finalized sales of the US$1.7-billion Hail Creek and Valeria project, the US$0.2-billion Winchester South site and the US$2.25-billion Kestrel project.

Profits from the sale of the of Rio Tinto’s Dunkerque aluminum smelter located in northern France for US$500 million were not included in the buyback proceeds, as the final adjustments have not been completed.

“Returning US$3.2 billion of coal disposal proceeds demonstrates our commitment to capital discipline and providing sector leading shareholder returns,” Jean-Sebastien Jacques, Rio Tinto chief executive, said in a press release.

“We continue to focus our portfolio on those assets which provide the highest returns and growth, which will ensure that we continue to deliver superior value to our shareholders in the short, medium and long term.”

The goal of the Anglo-Australian miner is to complete the off-market purchase of up to 41.2 million of its shares by the end of 2018.

In August, Rio Tinto announced it had completed off-loading all of its Queensland Australia coal sites and projects. The sales generated US$3.95 billion in revenue for the company.

Following the completion of the Australian project sales, Rio Tinto updated its 2018 production guidance to 4.0 million tonnes of hard coking coal and 2.5 million tonnes of thermal coal.

Rio Tinto limited shares were up 7 percent on Thursday (September 20), trading at AU$78.10.

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