TOP NEWS: Glencore To Buy Rio Tinto Coal Assets For USD1.7 Billion

20th Mar 2018 08:17

LONDON (Alliance News) - FTSE 100-listed miner Glencore PLC said Tuesday it will buy peer Rio Tinto PLC's interests in the Hail Creek coal mine and the Valeria coal resource in Australia.

Glencore is to pay USD1.7 billion for Rio Tinto's 82% interest in Hail Creek and its 71% holding in Valeria, both located in central Queensland.

The remaining 18% of Hail Creek is owned by Nippon Steel Australia Pty Ltd, Marubeni Coal Pty Ltd, and Sumisho Coal Development Pty Ltd. Each partner can sell its stake to Glencore through a 'tag-along' right as part of Glencore's purchase. If all did so, this would result in a further consideration of up to USD340.0 million, Glencore said.

Glencore noted Hail Creek had JORC resources of 794 million tonnes of ore with proven and probable reserves of 132 million tonnes of coal. In 2017, Rio Tinto netted pretax profit of USD357.0 million from Hail Creek. The Valeria coal deposit has JORC resources of 762 million tonnes, Glencore said.

Subject to the necessary approvals, both companies expect the deal to complete during the second half of 2018.

Rio Tinto added it has a separate process underway to sell its remaining Australian coal assets.

Rio Tinto Chief Executive Jean-Sebastian Jacques commented: "The sale of Hail Creek and Valeria delivers compelling value for our shareholders and continues our strategy of strengthening our portfolio, focusing on highest returns, maintaining a strong balance sheet and allocating capital to the highest value opportunities."

"We expect that Hail Creek will continue to perform strongly under its new owner, securing long-term jobs and continuing its contribution to the State of Queensland."

Glencore shares were up 0.4% in early Tuesday trading at 370.85 pence each, and Rio Tinto shares up 1.2% at 3,655.00p.

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