02/12/2014 04:27 EST | Updated 04/14/2014 05:59 EDT

Rio Tinto to sell or lease Kitimat port to LNG Canada

More pieces are falling into place for the LNG Canada natural gas liquefaction plant and export terminal in Kitimat, B.C.

On Wednesday, Rio Tinto PLC said it had reached an option agreement to sell or lease its wharf and associated land to LNG Canada.

Rio Tinto said the terms of the deal were confidential.

The agreement gives LNG Canada, a joint venture of Shell Canada Energy, China's Phoenix Energy Holdings Ltd., Korea's Kogas Canada LNG Ltd. and Diamond LNG Canada Ltd., an affiliate of Mitsubishi Corp., access to the deep water port in Kitimat.

LNG Canada has an export permit and is undergoing an environmental review on building an LNG plant.

LNG Canada vice president Andy Calitz said the agreement "represents the best opportunity to bring the liquefied natural gas industry and its benefits to the people and communities of British Columbia."

Several LNG proposals are in the works for British Columbia’s West Coast, but none have yet received a green light. Companies such as Chevron Corp. and Malaysia’s Petronas are also proposing projects.

Similarly there is interest in export terminals along the B.C. Pacific Coast because of the potential to bring Canadian oil and gas to booming Asian markets.

British Columbia is set to release the general framework for its proposed LNG tax regime with its provincial budget on Tuesday, which could prompt more firm decisions on LNG terminals.

Premier Christy Clark has signalled support for LNG projects, but said the province is committed to protecting its environment.  

Rio Tinto has been selling assets to reduce its debt since acquiring Canada's Alcan aluminum assets in 2007 for US$38.1 billion. It is modernizing the aluminum plant in Kitimat and plans to share use of the deep water port with LNG Canada.