Glencore snubbed in Australian coal mine sale
London — Rio Tinto Group has backed an improved offer by China’s Yanzhou Coal Mining to sell its Australian coal mines, snubbing a last-minute bid from Glencore Plc.
Shareholders should vote for the $2.45bn offer from Yancoal for its Coal & Allied unit in New South Wales, Australia, Rio said in statement on Tuesday, citing price, the likelihood of regulatory approval and funding certainty.
Glencore CEO Ivan Glasenberg submitted a $2.55bn proposal to buy the mines on June 9. This topped an earlier offer from Yancoal that included an initial $1.95bn cash payment and $500m in annual installments of $100m following completion. Yancoal responded by offering improved terms of a single $2.45bn payment.
"Yancoal’s revised offer is the most attractive because it removes the deferred payment structure, can meet the timeline we have set for the transaction, and has given us certainty regarding the outstanding regulatory approvals required," Rio CEO Jean-Sébastien Jacques said in the statement.
Yancoal, which is 13% owned by Asian commodity trading giant Noble Group, said in January that the acquisition would make it Australia’s largest pure-play producer of the commodity. Chinese state-owned Yanzhou Coal owns 78% of the Australian Securities Exchange-listed company.
The deal is the first major sale of an operating asset by Rio under CEO Jacques. In October, the producer agreed to sell its stake in the Simandou iron ore project in Guinea to Aluminum Corporation of China, a partner in the development.