Chinese-backed miner Yancoal has confirmed it is reviewing its options after multinational commodities giant Glencore trumped its US$2.45 billion for Rio Tinto’s NSW coal assets.
Glecore, which has mines alongside Rio’s in the Hunter Region, made a formal US$2.55 billion bid for Rio’s Coal & Allied business on June 9. The bid was clearly made to trump that of Yancoal’s, which was US$100 million lower.
Rio announced the terms of a potential sale of Coal & Allied to Yancoal in January 2017, and acknowledged the bid from Glencore in a short statement on June 9, saying the board and management would “give the proposal appropriate consideration,” and would respond in due course.
Yancoal, meanwhile, reported it had spoken with its Chinese backers and received permission to consider an upgraded bid of its own, meaning the potential of a full-scale bidding war for Rio’s prized Hunter Valley mines.
“If Rio Tinto determines that the Glencore proposal is a superior proposal, Yancoal will have a right to match or better that proposal,” Yancoal said on June 11.
Glencore said the Coal & Allied assets would be a highly strategic addition to its Australian portfolio.
“The addition of the C&A assets to our existing portfolio in the Hunter Valley would unlock large scale mining and operating synergies,” Glencore said. “Glencore’s combined portfolio of mines in the Hunter Valley would have production capacity of 81 million tonnes per annum of high energy coal that feeds increasing Asian demand for high efficiency, low emission coal.”
Glencore says its offer to Rio matches the terms of Yancoal’s, but is worth US$100 million more, and thus should be considered superior.