Rio prefers Yancoal to Glencore in Australia coal sale

SYDNEY - Agence France-Presse

Rio Tinto on June 26 recommended shareholders accept a new improved offer from Yancoal for its Australian coal assets, after the China-backed firm trumped a fresh bid from Swiss commodities giant Glencore.

Rio, the world’s second-largest miner, said in January it was selling Coal & Allied to Yancoal Australia -- majority-controlled by China’s Yanzhou Coal -- for $2.45 billion.

But Glencore, which like Yancoal also operates numerous coal mines in Australia, offered US$100 million more for the assets in New South Wales state earlier this month.

Rio last week said it still favored Yancoal since the deal was expected to be completed faster due to greater funding and regulatory certainty, leading Glencore to deliver a fresh $2.675 billion bid over the weekend.

With the stakes raised, Yancoal came back with its own improved $2.69 billion offer on June 26, which Rio said it preferred.

“The revised offer from Yancoal of $2.69 billion offers compelling value to our shareholders for our Australian thermal coal assets,” said chief executive Jean-Sebastien Jacques in a statement.

“This sale process has been in progress for a long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal.”     

Yancoal has already been given the green light by Australia’s Foreign Investment Review Board, while the Glencore plan would be subject to regulatory approval.

Rio holds its annual general meeting in London on Tuesday, where shareholders are set to vote on the deal.

Rio, which in February reported a surge in annual net profit thanks to improving commodity prices, is selling Coal & Allied in a divestment drive that analysts expect will lead to a complete exit from the sector.