Rio Tinto sells Australian coal mine for minus-$60 million

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Australia’s hilarious. It’s the last place on earth, seemingly, where coal is still a thing, to the point where the government actively encourages mining companies to build them.

I know, right? Hysterical. It’s absurdist comedy.

Meanwhile, in reality, nobody wants coal. Nobody. Like Tang, Tara Reid, Nickelback, bubble tea, the Hartford Whalers, and Tae-Bo, coal is history.

The latest example of this comes from Rio Tinto’s (NYSE:RIO) Blair Athol coal mine, which has been shuttered for four years.

Sure, there’s lots of coal in the mine, which is the second oldest in Queensland, but nobody actually wants to buy it anymore, mostly because we’re not living in Victorian England, nor drawing a lot of cave paintings, nor trying to get ten million barbecues started.

So Rio Tinto, which didn’t get to where it is today by hanging on to bad dreams, sold the mine to Orion Mining subsidiary TerraCom, for the princely sum of one single dollar.

Which is bad in and of itself. But it gets worse.

So keen is Rio Tinto to lose this black soot pumping albatross, that it’ll pay US$60 million of the rehab costs at the site.

Rio Tinto is, basically, paying $60 million for someone to take this pile off their hands.

THAT is how ‘done’ coal is.

Frankly, I haven’t seen a seller this motivated since the Tampa Bay Lightning, four years after giving Vincent Lecavalier an 11-year $85 million contract,  agreed to pay him $2.3 million per year for the following fourteen years if he would just go play somewhere else.

This is actually the second Australian coal mine that has sold for a buck in recent times, which sets the base price for a black hole in the ground pretty low going forward.

Cameron McRae, TerraCom’s chairman, told Reuters, “Thermal coal is still going to be a large part of the energy mix in the future,” somehow managing to say the words without giggling. He hopes the min can churn out 2 million tonnes of coal annually, which would bring in $100m in revenues at today’s prices, and about $8 in profits.

Meanwhile, Canadian gold explorers are up six-bagging.

Oh, Australia.

— Chris Parry

http://www.twitter.com/chrisparry

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