Yancoal acquisition of Rio coal assets set for another twist

Image: Rio Tinto

Yancoal Australia is already planning to sell a stake in the Hunter Valley coal operations it is set to acquire from Rio Tinto.

China’s Yanzhou, which owns 78 per cent of Yancoal, said in a Hong Kong Stock Exchange announcement its board of directors had voted in favour for Yancoal to onsell a 16.6 per cent share in the Hunter Valley Operations (HVO) mine, part of the proposed $US2.69 billion ($3.35 billion) deal with Rio.

ASX-listed Yancoal would form a joint venture at HVO with the third party once it has completed the acquisition of Rio’s Coal & Allied Industries business unit, which also includes the Mount Thorley and Warkworth operations.

Yancoal was today placed in a trading halt on the ASX ahead of a company announcement.

The Yanzhou statement outlined the board had voted: “To approve Yancoal Australia to transfer 16.6 per cent of interest in HVO Joint Venture which it holds at the time to a third party and jointly establish a joint venture to jointly operate and manage the coal mining assets related to HVO Joint Venture after the completion of the acquisition of 100 per cent equity interest of Coal & Allied Industries, and approve other relevant arrangements made pursuant to the needs of cooperation.”

While the buyer has not been named, Glencore emerged as Yancoal’s major opponent for the thermal coal assets when it launched a counter bid for Coal & Allied in June.

Despite Rio preferring improved offers presented by Yancoal, Glencore was persistent in its chase of Coal & Allied, twice attempting to sway the seller.

Rio’s shareholders approved the Yancoal offer in late June, leaving the Chinese-controlled company to finalise funding for the acquisition, which also involves a tag-along offer for Mitsubishi’s 32.4 per cent stake in the HVO JV.

The Yanzhou statement also outlined that Yancoal would soon announce a raising for the transaction and it would “subscribe for no more than $US1 billion” of the shares offered.