Glencore has wrapped up the purchase of a stake in a large Australian thermal mine Australia, underscoring its position as the world’s biggest exporter of the fossil fuel.
The London-listed company on Friday said it had received the regulatory approvals needed to complete the acquisition of a 49 per cent interest in the Hunter Valley Operations from Yancoal, a state-backed Chinese miner.
Yancoal acquired the HVO mine from Rio Tinto in August 2017. It subsequently agreed to on a 49 per cent stake to Glencore for $1.1bn and form a joint venture. Glencore has assets close to the HVO mine in the state of New South Wales.
However, the deal caused some concern in Japan where it was raised with the country’s Fair Trade Commission.
The high calorific value and low impurity levels of coal produced in the Hunter Valley region of New South Wales is highly prized by Japanese utility companies. Thermal coal is burnt in power stations to generate electricity.
Glencore chief executive Ivan Glasenberg has repeatedly brushed off concerns about its position in thermal coal, arguing the company’s volumes are a small fraction of a 6bn tonne a year global market. Glencore produced 120m tonnes of coal last year and around 67.5m tonnes from Australia.
“Glencore has completed the acquisition of a 49 per cent interest in the Hunter Valley Operations (HVO) coal mine in NSW, following the receipt of regulatory approvals,” said Ian Cribb, chief operating officer of Glencore’s coal business in Australia, said in a statement.
“The HVO Joint Venture (JV) with Yancoal, which owns a 51 per cent stake, is now established. We look forward to a successful partnership with Yancoal at the HVO JV and expect it will bring significant benefits for both companies and their shareholders.”
High quality Australian thermal coal is currently trading at almost $95 a tonne, according to a price assessment by Argus.
Mr Glasenberg told shareholders at Glencore’s annual shareholder meeting in Switzerland this week that is was making a margin of $32 a tonne on its coal sales.
https://www.ft.com/content/f573f6fc-4f87-11e8-a7a9-37318e776bab