Reuters: Deals: Aquila to sell stakes in coal mines to fund iron ore push

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Aquila to sell stakes in coal mines to fund iron ore push Apr 3rd 2012, 00:40 SYDNEY | Mon Apr 2, 2012 8:40pm EDT SYDNEY (Reuters) - Aquila Resources (AQA.AX) said it plans to sell its stakes in two Australian coal mines part-owned by Vale (VALE5.SA) in order to help fund its share of an iron ore project in the country's rich western iron belt. Headed by Tony Poli, a former accountant who made billions riding Australia's mining boom, Aquila has agreed to sell its 50 percent interest in the Isaac Plains coal mine to Sumitomo Corp (8053.T) subsidiary Ocean Coal Mining for A$430 million ($447 million). The sale is subject to Vale not exercising a 60-day pre-emptive right to buy Aquila's stake, Aquila said. The Isaac Plains mine is Aquila's only cash generating and producing asset and Aquila is banking on the revenue to help fund its estimated A$3 billion share of development costs for the West Australian Pilbara iron ore project. Mine workers in Australia have come to refer to iron ore as red gold for the riches it brings, despite it being the second most abundant metal on the earth after aluminum. Aquila, 15 percent owned by China's largest steel company, Baoshan Iron & Steel (600019.SS), hopes to be shipping ore by 2014 at a rate of 3.3 million tons a year. Aquila is already in negotiations to sell Vale the remaining 24.5 percent stake in another coal mine not yet developed, but has been locked in a legal dispute over how much it is worth. Aquila on Monday urged Vale to agree to an independent valuation of the Belvedere coking coal mine after Vale lost an appeal in Australia's courts over independent assessments. The promise of ready buyers from Asia's burgeoning steel industries has created a stampede for iron ore in Australia to rival the nation's gold rush of the early 20th Century and the nickel boom of the 1960s. ($1 = 0.9612 Australian dollars) (Reporting by James Regan; Editing by Jonathan Hopfner) Link this Share this Digg this Email Reprints

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