Swiss commodities group Glencore has offered Rio Tinto US$2.55bn for Coal & Allied, its holding for coal mining assets in Australia, outbidding by US$100m a previous offer from Yancoal Australia.
In January 2017, Rio Tinto had reached an agreement with Yancoal Australia, a 78%-owned subsidiary of Chinese coal company Yanzhou Coal Mining, on the sale of Coal & Allied for US$2.45bn. The transaction, which was approved by the Australian Foreign Investment Review Board (FIRB) in April 2017, is still subject to shareholder approval from Rio Tinto Ltd. and Yanzhou Coal Mining Company shareholders (Yancoal has just received Chinese regulatory approval).
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).
Yancoal already operates several coal mines across the country, including in New South Wales, while Glencore operates 18 open-cut and underground coal mines in Australia, including coal mines near the Coal & Allied assets in New South Wales. Integrating Rio Tinto's Hunter Valley Operations would help Glencore boost its coal production capacity in Australia to 81 Mt/year.