Glencore agrees to buy 49% of Australian coal mine

News | 27 July 2017


Glenore has agreed to buy a 49% interest in the Hunter Valley Operations (HVO) coal mine in Australia from Yancoal Australia Limited (Yancoal), in a deal with multiple layers.

Glencore will initially acquire a 16.6% interest in HVO from Yancoal, and the two companies will work together to buy Mitsubishi Development Pty Ltd’s 32.4% interest in HVO, completing Glencore’s 49% stake.

As part of the deal structure, Glencore and Yancoal formed a joint venture to operate the mine, following Yancoal’s acquisition of Coal & Allied from Rio Tinto – Glencore becomes entitled to its share of profits from HVO from the date that Yancoal completes its acquisition of Coal & Allied.

In a statement, Glencore said it will pay “US$1.1bn plus a 27.9% share of US$240m non-contingent royalties over five years, and 49% of price contingent royalties payable by Yancoal to Rio Tinto on production from HVO in respect of the Coal & Allied acquisition”. 

Glencore will also subscribe for US$300m of shares in Yancoal – the commodity trader is using its own balance sheet to fund every element of the purchase. 

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