The Australian mining marketplace is watching for Rio Tinto’s response to Glencore’s attempt to trump Yancoal Australia’s $US2.45 billion ($3.23 billion) offer for its coal operations in New South Wales.
Glencore last week made a slightly superior bid for Rio’s NSW coal division, Coal & Allied Industries, with a $US2.55 billion acquisition proposal.
If successful, Glencore would then seek to acquire Mitsubishi Corp’s coal interests in the region with a tag-along bid.
Rio’s board is expected to meet this week to discuss the Glencore proposal. It acknowledged that the offer was made on Friday last week, saying a response would come in due course.
After learning of Glencore’s bid, Yancoal parent company, China’s Yanzhou Coal Mining Company, noted on the Hong Kong Stock Exchange, “Rio Tinto has the right to consider whether the Glencore proposal constitutes a superior proposal”.
“If Rio Tinto determines that the Glencore proposal is a superior proposal, Yancoal Australia will have a right to match or better that proposal.”
Yancoal made its bid for Coal & Allied in January. The proposed deal involved a $US1.95 billion upfront payment and the potential for a further $US500 million over five years.
The Foreign Investment Review Board (FIRB) delivered its approval of Yancoal’s offer in April.
Last month Yancoal also launched a $US710 million tag-along offer for Mitsubishi’s 32.4 per cent stake in the Hunter Valley operations, which has now been accepted.
Coal & Allied’s assets include majority shares in the Hunter Valley Operations mine, the Mount Thorley mine and the Warkworth mine. The three operations produced 25.9 million tonnes (Mt) of thermal and semi-soft coking coal in 2016, of which 17.1Mt were Rio Tinto’s share.