Glencore acquires a 16.6% stake in HVO from Yancoal (Australia)

Yancoal Australia, a 78%-owned subsidiary of China-based Yanzhou Coal Mining, has agreed to sell a 16.6% stake in the Hunter Valley Operations (HVO) in Australia to Swiss commodities group Glencore for $429m. The transaction puts an end to their recent bidding war over Coal & Allied, Rio Tinto’s Australian thermal coal mining assets.



In January 2017, Rio Tinto had reached an agreement with Yancoal Australia on the sale of Coal & Allied for US$2.45bn; this transaction was approved by the Australian Foreign Investment Review Board (FIRB) in April 2017 but still required the approval of the companies’ shareholders. In June 2017, Glencore outbid Yancoal with a US$2.55bn offer, prompting Yancoal to bid US$2.69bn for Coal & Allied (of which US$2.45bn in upfront cash payment). Rio Tinto has confirmed Yancoal Australia was the preferred bidder.



Coal & Allied operates multiple, multi-seam open cut mines in the Hunter Valley region of New South Wales. It holds a 67.6% stake in the Hunter Valley Operations mine, an 80% interest in the Mount Thorley mine, a 55.6% interest in the Warkworth mine, a 36.5% interest in Port Waratah Coal Services (which owns a coal export terminal located at the Port of Newcastle) and other undeveloped coal assets. The Hunter Valley Operations and Mount Thorley Warkworth mines together produced 25.9 Mt of saleable thermal and semi-soft coking coal in 2016 (17.1 Mt Rio Tinto share).



Under the terms of their new agreement, Yancoal and Glencore will seek to acquire the 32.4% stake held by Mitsubishi in the HVO mine. Acquiring this stake would help Glencore reach 49% in this mining complex.