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Australian regulator claims Rio Tinto knew of overstated Mozambique resource

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Australian regulator claims Rio Tinto knew of overstated Mozambique resource

The Australian Securities and Investments Commission claimed Rio Tinto knew that its coal resource estimate for its then-Mozambique asset was "materially" overstated within months of completing the deal, The Australian Financial Review reported March 7.

The watchdog, which filed a legal proceeding earlier this month, alleged that the coal resources and reserves that Rio Tinto released in March 2012 were 67% lower than what the company had estimated in the due diligence assessments for the acquisition.

According to the report, a disclosure made in a parallel case launched in a U.S. court revealed that the miner had known before the completion of the US$3.7 billion Riversdale deal that the coal resource estimates had to be lowered.

The claim made by ASIC came after the legal counsel for Rio Tinto, former CEO Tom Albanese and former CFO Guy Elliott filed a consolidation motion to have recent U.S. SEC fraud charges against them dismissed. The company also requested that its trade secrets be kept away from the public eye during the investigation.

In 2014, Rio Tinto sold its Rio Tinto Coal Mozambique unit to the International Coal Ventures Pvt. Ltd. consortium, which includes Steel Authority of India Ltd. and Coal India Ltd., for US$50 million.