Glencore to buy Australian coal mine from Rio Tinto in $1.7bn deal

Glencore has bought Rio Tinto’s Hail Creek coal mine in Australia for $1.7bn, expanding the miner’s presence in the global coal markets as others seek to move away from the fuel.

Switzerland-based Glencore said it had agreed to buy Rio’s 82 per cent interest in the Queensland mine, as well as the company’s 71.2 per cent interest in the Valeria coal mine.

The purchase is the latest move by Glencore to expand its Australian coal operations after the company bought a 49 per cent interest in China’s Yancoal’s Hunter Valley mines last year.

While many banks and investors have shunned investing in coal assets in recent years due to concerns about pollution and climate change, prices have surged on the back of rising demand from Asia.

Hail Creek is one of Rio Tinto’s last two remaining coal assets. Its chief executive Jean-Sébastien Jacques has sought to streamline the Anglo-Australian company and focus on its core assets of iron ore and copper. Its Kestrel coal mine in Queensland is also currently up for sale.

The Hail Creek mine produces coking coal for steel as well as thermal coal for power stations. It produced about 9.4m tonnes of coal for export last year.

Glencore is already a large producer of coal in Australia, producing over 87m tonnes of the fuel last year from its 17 mines in Queensland and New South Wales.

The remaining 18 per cent of Hail Creek is owned by Nippon Steel, Marubeni Coal and Sumisho Coal Development. The companies all have a right to sell their share to Glencore, for an additional $340m, Glencore said.

Source: FINANCIAL TIMES