Yancoal trumps Glencore bid for Rio Tinto’s coal mines

Cecilia Jamasmie | June 20, 2017 | 10:03 am Energy Top Companies Asia Australia China Coal

Mount Thorley Warkworth (pictured) is part of the package of assets Yancoal Australia is acquiring. (Image courtesy of Rio Tinto)

The battle over Rio Tinto’s (ASX, LON:RIO) coal assets in Australia’s Hunter Valley seems to have come to an end as the miner has picked an improved offer by Yancoal Australia (ASX:YAL), a subsidiary of China’s Yanzhou Coal Mining, over Glencore’s (LON:GLEN) bid.

Acquisition would make of Yancoal Australia’s largest pure-play coal producer.

Shareholders should vote for the $2.45 billion proposal from Yancoal for the Coal & Allied unit in New South Wales, the company said Tuesday. Even though the price is lower than Glencore’s $2.55 billion bid, Rio said the prospect of regulatory approval and funding certainty made Yancoal a better choice.

Early this month, Glencore made a surprise bid for Rio’s assets, which are near its own mines in the Hunter Valley. A few days later, Yancoal Australia stroke a deal with Mitsubishi to buy its 32.4% stake in the same two mines.

Analysts say there’s still a chance the Swiss commodities trader and miner comes back with a higher bid.

The deal with Yancoal represents the first major sale of an operating mine under Rio’s new chief executive Jean-Sebastien Jacques.

Yancoal, which owns or operates seven coal mines in Queensland and NSW, said in January that the acquisition would make it Australia’s largest pure-play coal producer.