Glencore agrees $1.1 billion deal for 49% interest in Hunter Valley Operations

Glencore agrees $1.1 billion deal for 49% interest in Hunter Valley Operations

Glencore has agreed a US$1.1 billion deal with Yancoal to acquire a 49% interest in the Hunter Valley coal assets.

The deal will Swiss miner and the Chinese firm form a joint venture at the New South Wales mine following Yancoal’s acquisition of Coal & Allied from Rio Tinto last month.

Glencore will assume a 16.6% stake in the Hunter Valley Operations (HVO) directly from Yancoal followed by the companies working together to acquire Mitsubishi’s 32.4% interest, according to a company statement.

“The addition of 49% of HVO to our existing portfolio in the Hunter Valley will unlock mining and operating synergies. Glencore’s combined portfolio of mines in the Hunter Valley, including HVO, will have production capacity of 69 million tonnes per annum of high quality energy coal to meet increasing Asian demand,” the statement read.

Glencore will pay $1.139 billion in cash plus a 27.9% royalty over five years as well as 49% of price contingent royalties payable by Yancoal to Rio Tinto on production at HVO as part of the Coal & Allied deal.

The transaction comes after Rio Tinto shareholders decided to approve the sale of Coal & Allied to Yancoal for $2.69 billion following a prolonged bidding war with Glencore.

@RGNonline