Glencore finally lands a stake in Australian coal mines with £1bn deal

July 28, 2017, 4:19 pm | Admin
Glencore has acquired half a coal mine in Australia, just weeks after losing a bidding war to buy the whole lot.

The FTSE 100 mining giant will shell out $1.1bn (£839m) to buy a 49pc stake in the Hunter Valley Operations in New South Wales. It will buy out Japanese conglomerate Mitsubishi, which owns 32pc of the mine, and acquire a further 16.6pc from Yancoal, which only last month beat Glencore to buy a majority stake from Rio Tinto for $2.69bn.

Analysts hailed the move as a “bargain” that offered “the best of both worlds”, and a significant victory for Glencore boss Ivan Glasenberg, after he lost a very public bidding war to China-backed Yancoal.

Glencore and Yancoal will form a joint venture with the former choosing the management team to run the mines.

The Hunter Valley Operations lie adjacent to mines already owned by Glencore and the company has stated repeatedly that it sees a chance to wring cost savings from combining the two.

Glencore first expressed an interest in buying Rio’s side of the Hunter Valley in 2013. It prizes the region for its “premium quality” coal, which is mainly exported to Japan, and believes the commodity will remain in high demand. Rio, by contrast, wants to stop mining coal, which has fallen out of favour as an energy source in many parts of the world and among environmentally conscious investors.

nder the terms of the deal Glencore will also buy $300m worth of shares in Yancoal’s equity raising, which it will need to do to fund its deal with Rio Tinto.

Glencore’s intervention means that Yancoal will not have to raise as much money as expected to complete the transaction. Meanwhile Glencore will have the rights to market the coal through its vast trading network.

“The deal would be a win-win situation for Glencore and Yancoal,” said Paul Gait, analyst at Bernstein.

http://www.telegraph.co.uk/business/2017/07/27/glencore-finally-lands-stake-australian-coal-mines-1bn-deal/

Last modified on August 9, 2017, 4:23 pm | 3283